Uh-oh! You just received your credit card statement, and it shows interest charges and a $38 late fee that you didnât expect. You realize youâre guilty of making a late credit card payment last month. Or worse, you realize you forgot to send your payment at all. Hereâs a rundown of potential impacts that your missed payment may have on your account.
- Youâre assessed a late fee.Â Most credit cards charge a late fee when youÂ make a late payment. In most cases, the fee is a flat charge of up to $39. In other instances, the fee might be tiered. For example, the late fee could be $15 if the balance is less than $100, up to $25 if the balance is $100 to less than $250 and up to $39 if the balance is $250 or more.
But what exactly does âup toâ mean? Federal laws now prohibit credit card issuers from charging late fees that are in excess of the amount due. So if you have a balance of only $12, then yourÂ late fee canât be more than $12.
On the other hand, there are credit cards that charge no late fees at all. In addition, a few cards automatically waive a first late payment. Nevertheless, donâtÂ interpret a late-payment forgiveness policyÂ as an excuse to pay late.
- You lose your interest-free grace period.Â Many credit card users avoid interest charges by paying their balance in full and on time. But if you fail to pay your statement balance on time, the interest charges are applied to your next statement in addition to any fees. In fact, interest charges are assessed based on your average daily balance for each day ofÂ the entire statement period. For cardholders who are already carrying a balance, the increase in interest charges wonât be as dramatic, but it can be significant.
- You’re charged a penalty interest rateâAKA penalty APR.Â Not only are most cardholders hit with a late fee and additional interest charges, but a new, higher penalty interest rate can apply when cardholders miss payments. Thankfully, some of the same simple cards, like the Avant Credit Card donât increase your APR as a penalty for late payments.
- YourÂ credit score suffers.Â Making a late payment on your credit card accountÂ can affect your credit score, but it depends.Â Itâs up to credit card issuers howÂ late a payment must be before itâs reported to the credit bureaus, but any late paymentÂ canÂ be reported.
Thankfully, most credit card issuers wonât report payments that are less than 30 days late. And some lenders wait as long as 60 days before reporting late credit card payments.
Just because issuers donât immediately report a late payment doesnât mean it doesnât exist. Your credit reports show the payment history for all of your credit cards, so check your reports to see whether a late payment has been reported to the bureaus.Â Youâre entitled to a free credit report from each of the credit reporting agencies once a year under federal law.
In between getting your free annual credit reports, you can see how your payment history is affecting your ownÂ credit by getting yourÂ free score and credit report card on Credit.com.
What to Do If You Miss a Payment
- Pay it as soon as possible.When you realize you missed a payment, make a payment immediately. The quickest way to make a payment is by phone or electronicallyânot by postalÂ mail. Making sure the payment is received quickly reduces the likelihood that your late payment is reported to the major credit bureaus. It also increases the chance that the card issuer is willing to forgive any late fees and interest charges.
- Contact your credit card issuer.Once youâve made a payment,Â if you were otherwise in good standing, youâre in an excellent position to request that any late feesÂ and interest charges be waived. Simply call your credit card company andÂ let it know the circumstances that caused you to pay late, such as if you didnât receive your statement. In most cases, the credit card provider is happy to waive these charges in order to satisfy and retain you as a customer.
- Fix the problem.AfterÂ youâve done what you can to limit the immediate harm caused by a late credit card payment, take steps to keepÂ it from happening again.Â For example, if your statement for your last billing cycle wasnât delivered in the mail, switch to electronic statements. Alternatively, you can see if your credit card issuer offers payment reminders via text or email. Even better, set up automatic payments if you can.
Itâs only human toÂ miss a credit card payment sometime. Itâs how quickly you address the error that matters to you, your credit score and your credit card issuer.
More on Credit Cards
- 6 Smart Credit Card Strategies
- How to Get a Credit Card with Bad Credit
- 11 Ways to Improve Your Credit Score
Note: Itâs important to remember that interest rates, fees and terms for credit cards, loans and other financial products frequently change. As a result, rates, fees and termsÂ for credit cards, loans and other financial productsÂ cited in this article may have changed since the date of publication. Please be sure to verify current rates, fees and terms with credit card issuers, banks or other financial institutions directly.
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