How late credit card payments affect your credit score—and what you can do about it
While credit cards have a lot of benefits and convenience, they come with a measure of responsibility. Forgetting the payment due date is one of the most common yet costly mistakes cardholders make. A day late can unleash a cascade of consequences, including penalties, late fees, and a deterioration of your credit.
This guide will explain late payment fees, the repercussions late payment fees may have on your finances, and some common-sense tips to avoid on time charges.
What are credit card late payment charges?
When you do not pay the minimum amount due by the billing due date, banks charge late payment fees or penalties. The late payment fees depend upon:
- The unpaid balance.
- The credit card issuers policy.
- Whether this is a one-time hiccup or happens regularly.
How do late payments affect your credit score?
Every late payment is reported to credit bureaus, and there will be repercussions.
- Decrease your credit score by anywhere from fifty to hundred points.
- Remain on your credit profile for seven years.
- Result in decreased odds of getting approved for a loan, and a credit card.
Even if your finances aren’t impacted in other ways, it has a negative impact on your overall creditworthiness.
Why do card issuers charge late fees?
Consider paying the bill on time as a sign of reliability to lenders. With late payers, banks have the right to charge late fees not only to compensate for the greater credit risk they have, but also as a deterrent and as a method evidently recognised by all consumers to guide them towards more responsible use of their money.
In conclusion, along with incurring fees, late credit card payments also damage your credit standing as well. The short term repercussions can be a wide range of credit score damage, late fees and increasing interest. You are able to utilise a credit card without adding any bad debt by being vigilant, setting up automatic payments, and making smart financial plans.
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Disclaimer: Mint has a tie-up with fin-techs for providing credit, you will need to share your information if you apply. These tie-ups do not influence our editorial content. This article only intends to educate and spread awareness about credit needs like loans, credit cards and credit score. Mint does not promote or encourage taking credit as it comes with a set of risks such as high interest rates, hidden charges, etc. We advise investors to discuss with certified experts before taking any credit.
