Consequences of Frequently Making a Late Credit Card Payment

Here are five reasons why you don't want to make a late credit card payment on a consistent basis. 

credit card payment

When money is short and something has to give, you might be tempted to skip or delay a credit card payment to free up cash for something you think is more important.

While putting off your monthly credit card bill may not seem as dire as missing a mortgage payment or failing to pay your utility bill, there is potential for serious implications when done frequently. So, take this decision seriously.

Here are the five possible consequences to be aware of if you decide to skip or make a late credit card payment on a regular basis.

Late Fee Charges

The most immediate and concrete impact of making a late payment is that you'll be charged a pricey fee for doing so. If you can manage to at least pay the minimum amount due on time, you won't incur the late fee. Though, in this instance, you will be responsible for paying costly interest on the amount you haven't paid.

This interest can accumulate quickly so you need to pay the remaining dollars owed as quickly as possible. Moreover, if you are late paying the minimum amount due, you will pay a late fee in addition to interest. 

Credit Rating Damage

Every late payment you make is recorded as a negative mark on your credit file. Just one or two of these negatives will likely have minimal effect on an otherwise good score. However, if your credit rating is already compromised, a late payment can be enough to tip it over the edge. With a lower credit score, it will make future credit –  such as a car loan, student loan or mortgage – more difficult to get, more expensive, or both.

Interest Rate Rise

Credit card companies offer variable interest rates on their cards, meaning that they can change the rate as they choose. In general terms, the better your credit rating, the lower the interest rate you'll be charged.

If you prove to be a less responsible customer by making late payments, you could find your card's interest rate begin to rise. This means paying off your debt will cost you more money, making any financial worries you have even worse.

Credit Limit Cut

If you continue to make payments past their due date, your card issuer may become concerned that you're experiencing financial difficulties and decide to limit its own risk. This can mean that your card's spending limit is reduced to prevent you from accumulating too much debt.

This is inconvenient if it reduces your ability to use your card, but having your account limit lowered can also have a damaging effect on your credit rating. Then, this can lead to other issuers lowering the limit on credit accounts you hold. 

Account Suspension or Closure

Finally, if your late or missed payments appear to be a repeated problem, your card issuer may decide to cut its losses. Your account could be frozen, which prevents your ability to use your card for further spending. This could be temporary, lasting until you've cleared your arrears. Or, it could be permanent, meaning that you'll need to keep making payments until your balance is cleared, at which point your account will be closed completely.

In times of money worries, your credit card payments may seem to be one of the least important to keep up with. As these consequences show, the dangers may be greater than you think. 

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