Card Late Payment
Finance

Late Card Bill Payments- Everything to Know About

We all use credit cards for paying our day to day expenses but using a credit card works like a loan: you are borrowing money to pay back later, which is done at the end of every month. Whatever amount of money you have spent has to be paid back or else there is a penalty involved. But taking credit and failing to pay back can interfere with your credit score. Thus, it’s very important to understand how late payments can affect your financial situations and what to do in such cases.

Late payment on credit card

There are many reasons that can contribute to delayed credit card payments. This could be a major reason that could affect your credit score while applying for personal loans.

Overspending

People spend recklessly while using a credit card as they don’t have to pay immediately. This makes it easier to ignore the amount they are spending at one go, which makes people overspend without even thinking about how they will be paying back the amount.

Delays due to uncertain reasons

Sometimes, repayment is delayed due to unavoidable circumstances that are not in our control. For instance, our salary may get delayed, we might be waiting for the office to reimburse the amount purchased on their behalf or there may be an issue of recovering the money we lent to someone.

Deadline paying

People avoid paying until they absolutely have to, which can lead to delay in payments. If you make a payment on time, you avoid paying a late fee.

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 Effects of paying late credit card bills

When you delay paying on time, there are many issues that you can face:

Expenses

When you avoid paying on time, you are just adding on to your expenses. You also have to pay a late fee. This can lead to credit card defaults which make it difficult for applying for another card in the future.

Difficulty in applying for loans

If you decide to apply for personal loans or try to acquire a loan from independent lenders such as from peer to peer lending, your credit score is checked. Default in payments can affect your score, which can make approval for your loan difficult and sometimes even impossible.

The action of credit card companies

Many credit card companies keep a check on the behaviour of their customers and can take their access away, until the debt is paid along with the interest. Losing access can become a problem if you require doing any kind of purchasing.   

Loss of reward

The card comes with a lot of rewards for their customers. These rewards depend upon your usage as well as on the timely payments. You won’t be able to claim these rewards if you have missed payments or have huge debts on your card.

 What to do if you have already missed payments

Clear your debts immediately

As soon as you know that there are unpaid bills due on your card, you should pay immediately. Instead of making any new purchases, focus on paying and clearing off the old debt first. Delaying a payment means adding more to your expenses.

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Negotiate

You can speak with your card companies to waive off penalties that can affect your credit score. There is no harm in talking to them; you can convince them that this is your first time neglecting the payments which will not be repeated. If your past records are clean, they may cut you some slack and choose to reduce your penalties.

Planning your finances

After your mistake has been identified, plan your finances in such a way that the same situation does not arise again. Automating your payments is a good solution to never miss any of your payments again.

Repayment should always be done on time because when you lose even a single payment, it affects your credit score as mentioned earlier. This makes it difficult for applying for loans, especially personal loans since they are unsecured, which means it does not require any kind of security or collateral in return for the loan. Whether you apply online for a quick loan or a bank loan, your loan is approved only once your credit score is checked.