- Missing a payment is something you want to avoid doing as it can lead to financial difficulty
- Late payments can negatively affect your credit report and may make it harder for you to get credit in the future. The interest rate is also likely to increase, which can make it more difficult for you to pay off your balance.
- If you want to avoid missing credit card payments, you may ask your credit card issuer to move your payment due date to another date or contact a financial counsellor to help you prevent it from happening again.
Using a credit card is an easy way to make online purchases, especially if you don’t have enough cash. It can also help you save money on interest and give you a chance to earn reward points. However, some people don’t always pay their bills on time. Missing a credit card payment can lead to negative consequences such as a bad credit score and may eventually lead to other financial challenges down the line.
This article will provide more details on the possible consequences of missed credit card payments and what you can do to avoid them.
Consequences of a missed credit card payment
There can be many consequences if you missed a credit card statement. Here are a few of them.
Your account may be shut down.
Your account may be shut down if you’re not able to make payments for more than 60 days, and the outstanding balance is more than $150. Your bank or lender may send you a default notice, or a letter that your account is in default because you’re behind payments. However, some lenders will allow you to come to an arrangement with them so it’s better to call them as soon as possible.
A late fee may be added to your bill.
A late payment fee will also be added to your bill, typically ranging from $5 to $35 if you don’t pay the minimum amount required by the due date.
Your interest rate may increase.
Lenders will charge you interest If you don’t pay your credit card balance by the end of the statement period. The average interest rate on a credit card is around 9%, while the highest rate is above 25%. So, if you had a debt of $2,000 on your credit card with a 15% interest rate, you will be charged $25 in interest alone at the end of the month. Additionally, your debt will grow each day the outstanding sum is not paid because of the continuous interest.
Collection agencies may contact you.
If you don’t make a payment after 60 days, your lender may send your debt to a collection agency. The collection agency will contact you via telephone or mail to try and collect the money you owe.
Avoid letting it come to this point if you can since debt collectors may be tougher than your credit card company. However, none of these things occurs overnight, so speak with your lender as soon as possible for you to find a solution and avoid the worst possible outcomes.
Collection agents may take legal action.
Collection agents may take legal action if you miss your credit card payments. They are responsible for making sure that your account is paid in full, and they work to make sure that you do so on time. If you miss a payment or two, it can be enough for collection agencies to go after your property or bank account, but if you’re late on multiple payments, they may take action against other assets as well.
Your credit score may suffer.
Paying for your credit card bills as soon as they are due will help improve your credit score. However, missing your credit card due date may lower your credit score and decrease your chances of being approved for future loans, depending on the length of the overdue payment.
Your credit card company may also forfeit your rewards if you have missed a payment. The exact number of payments you can miss without losing your rewards will depend on your credit issuer. Unfortunately, you probably won’t get your rewards back once you get caught up on payments. An example is you may have an interest-free period of 24 months. However, if you miss a payment, that interest-free period is likely to be eradicated.
What to do if you miss a payment
Review Your Income and Expenses
You should review your monthly income and expenses If you have missed a credit card payment. This can help you identify ways to reduce your monthly expenses and increase your income so that you can pay off the debt and avoid further consequences. Reviewing your income and expenses is also a good way to determine if you need to make additional payments on other debts. However, if you don’t have income, you will also struggle to make additional payments.
Consider Automatic Payments
You should also consider making automatic payments if you miss a credit card payment. The best way to do this is by setting up a monthly automatic debit of just enough money to cover the payments you want to make. This way, you won’t have to worry about missing any payments even when your schedule gets disrupted or you’re away from home.
Ask About Moving Your Payment Due Date
You can ask your credit card company about moving your payment due date, so you do not miss future payments. Some issuers may also be able to give you a grace period or even an extension of time to pay if you’re having trouble making your payments.
If you do miss a payment, it may be worth looking at when the payment is due to be debited from your account. Try to schedule a payment to be taken when you are most likely to have the funds in your account, for example, just after you receive your wages.
Ask About Credit Card Relief Programs
If you are having trouble making your credit card payments, we recommend that you seek urgent assistance, since a little problem can quickly become a major one.
You could try speaking with your bank to see if they can help by perhaps setting up a repayment arrangement, or you could seek independent guidance from the National Debt Helpline to find a service near you.
Contact A Reputable Credit Counsellor
You should contact a reputable credit counselling service when you miss a payment.
They’ll want to know why you missed the payment, and then they’ll work with you to find out what went wrong and how they can help prevent this from happening again in the future. In some cases, these companies may be able to negotiate a reduced interest rate on your debt or waive late fees in exchange for making payments on time for a certain period of time.
Make Only the Minimum Payments
If you miss a credit card payment, at least make a minimum payment on your credit card every month. This will be the smallest amount you can afford to pay, and it’s the amount that will allow you to keep your account open and avoid paying interest on the balance.
How to avoid missed credit card payments
- Make sure your monthly statements are up to date. Make sure your monthly statements are up to date and accurate. If they’re not, call or write to the company to let them know so you can get the problem fixed as soon as possible.
- Set up alerts. Many credit card companies now provide alert systems that you may use to be notified when your credit card payment is due. If they do not provide this service, it may be good to set up an alert or reminder on your phone each month when your billing period is about to end.
- Use other methods of payment. While collecting rewards points may be appealing, the expense of going into debt to do so is almost definitely not worth it. As a result, using a debit card or even cash may be a smarter method to pay.
How a missed or late credit card payment affects your credit score
A credit score is a number that reflects how well you manage your finances. It’s calculated by taking all of your accounts into consideration, including your outstanding debt, current payments on those accounts, and the length of time it takes for you to make payments.
Your credit score is a number between 0 and 1000 (or sometimes 1200, depending on the credit bureau), and lenders use this score or rating as one of the factors in deciding whether or not to give credit or a loan. The higher your score is, the more likely you are to get accepted for credit because it illustrates your good past financial behaviour. A late or missed payment can cause a significant credit score drop. The more times you miss a payment, the lower your credit score will be, and the less likely lenders will approve you for a loan if you would need one in the future.
In the hustle and bustle of daily life, it’s easy to lose track of our expenses. Do not let this happen to you. Missing a credit card payment can result in late fees and increased interest rates. Furthermore, it may harm your credit file and reduce your chances of getting a loan. Make it a point to pay your payments on time. If you are having difficulty managing your funds, get assistance from a financial assistant or expert before you miss any more payments.