Paying a late credit card can happen to anyone. It only takes a lack of planning for the deadline to elude you. Or, your budget is tight and it’s the easiest payment to “skip”.
However, even if an occasional delay seems harmless, the price to pay is high.
The consequences of paying a late credit card
You pay your credit card a few days late. No one is contacting you and you believe that your action has gone unnoticed. However, whether you realize it or not, the repercussions are there.
Adding credit charges
From 1 day late, the card issuer may charge credit charges. These are on average 19.99% of your outstanding balance. This balance includes that of your deferred payment purchases of the “Buy now, pay later” type.
Loss of promotional rate
If you benefit from a reduced or promotional rate, a late payment generally cancels this privilege. The regular rate (between 19.99% and 24.99%) will therefore be applied to the balance of all your purchases. Unless you quickly correct the situation and communicate with the issuer, your future transactions will be calculated at the regular rate.
Loss of privileges
If you have a card that allows you to accumulate points, a delay may cause you to lose this privilege. You could also lose the points collected if your delay is 90 days or more.
Any delay of 30 days or more is recorded in your credit file. And this information will stay there for 6 years.
Credit score drop
Each credit file has a rating varying between 300 and 900. Your payment history makes up 35% of this score. It is therefore the factor that affects it the most. As soon as you have two late payments, you lose between 60 and 100 points.
A credit score and a low score will affect your future financial transactions. A “bad” record will cause you to be refused a loan, or charged a higher interest rate.
But the impact can also be felt in your daily life. For example: if you are looking for a job; try to get a promotion; wish to sign a rental lease; negotiate your auto and home insurance premiums.
Submission of the file to a collection agency
If you have significant delays, your file may be turned over to a collection agency. The latter will add all possible pressure to obtain a payment.
You don’t pay off your credit card and keep accumulating delays? Legal proceedings will be brought against you. The creditor can obtain a judgment in order to seize your salary or your property.
What if you are late to pay your credit card?
1. Communicate with the transmitter.
You will demonstrate that you are aware of your error and want to take action to correct it. This will prevent the consequences from escalating and possibly a note in your credit report.
2. Stop using your credit card.
Do not use it again until it is fully reimbursed. However, keep it safe if you don’t think you can control its use! If your credit report is tainted, you could have trouble getting a new card. If you keep it and use it responsibly (after having reimbursed it!), You will demonstrate that the delay was just a mistake.
3. Automate your payments.
You can also activate an alert 5 days before your payment is due.