It can happen to the best of us: we think we’re on top of our credit, only to hit financial trouble and have no choice but to make a late credit card payment. Nobody wants to face the consequences of a late payment, but don’t fret – it’s a fairly common issue that you can quite easily bounce back from.
If you make a credit card payment that exceeds the cut off time, or doesn’t sufficiently cover the costs you’re required to pay off, it’s considered a late payment. Here’s what you can expect to happen:
- You’ll start receiving a late fee
The first thing that will happen once you’ve failed to make a payment on time is that your creditor will issue you with something called a late fee. This is a sum of money that’s added onto your initial credit balance for repayment, as a consequence of your original late payment. The fee might not be too high, but you’ll be charged the extra sum of money for every month following your late payment that you fail to pay off the outstanding balance.
- It’ll affect your credit
If your payment is more than a month overdue, there’s no preventing it from showing up on your credit report as a late payment. It can stay on there for up to seven years, but don’t despair if it means credit is less than perfect – there are sometimes ways to dispute your late payment and get it removed from your credit report. You can find out exactly how to do this and learn more at Crediful.com.
- Your interest rates will climb
Don’t expect your credit card interest rates to stay the same if you make a late payment. Once you’re two months on from failing to pay your late payment, you’ll more than likely experience an increase in your interest rates to the highest maximum rates you can get on a credit account. Any promotional interest rates you may have been originally given as an incentive to sign up will be lost.
- You might be sued
In extreme cases of late payment, your creditor may ultimately decide to sue you, and if they’re successful, you’ll have to plead your case in court. This is known as a judgement, and if one is successfully handed to you, you’ll have to give up your personal assets in order to pay off your debt. You may require a lawyer.
Paying off a late credit card payment
The best solution following a late credit card payment is simply to pay it off as quickly as possible. If you want to avoid harming your credit, the faster you can act, the better. This is often easier said than done, but if you know for certain that you’ll be in a better financial position within a few weeks, consider taking out a loan to pay your outstanding balance off. You can then repay the loan when your additional finances arrive into your account.