Most of us are aware of late credit card payment consequences but don’t fully understand them until they hit us. And once they do, it is too late. Some of the damage done cannot easily be undone, even if this late credit card payment has occurred just once.
We know that it is difficult to be on time every time…things do go awry and you simply can’t help it. Yet, to the maximum extent possible, it is highly advisable that you make your credit card payments on time.
In this post, we share six critical reasons for which we believe late credit card payment to be an especially bad idea that you must try and avoid at all costs.
1. Damaged Creditworthiness
All too often, it takes just one late credit card payment to damage your overall creditworthiness. This is especially true in case of large outstanding balances on your card, with even the minimum payable amount not being paid on time.
Remember that all the time, there are concerned bodies taking note of your credit card payments. The moment you delay these payments, it is akin to a ‘strike’ being placed against your overall creditworthiness.
Once such delays start occurring all too frequently, you will find it especially difficult to repair your creditworthiness.
Therefore, to the maximum extent possible, to ensure your credit score remains in good standing, pay your credit card bills on time and ideally in full with no balance outstanding.
2. Lowered Credit Limits
The moment banks sense poor repayment habits in their credit card customers, they begin to assess their credit limits. Many see a downward revision with the available limit being reduced dramatically.
This can eventually lead you to a position where you will not be able to use your credit card any further until you have paid off all or most of your current outstanding balance.
This is a major deterrent for which you must try and avoid late credit card payments. It especially works against your available credit limit and could have a drastic impact on the way you live your life, especially if a sizable chunk of your payments are made with your credit card.
3. Late Credit Card Payment Fees
An extremely critical and painful reason for which you really should avoid paying your credit card bills late is the fact that multiple fees are added on, whereby your eventual outstanding amount balloons significantly.
To give you an example, if you do not pay even the minimum payable amount, there will be a separate late fee levied just for that. This is over and above interest, which is charged on your outstanding amount. Of these additional fees and interest charges, there are taxes levied, which further add to your overall financial burden.
All of this is simply not worth it. Just pay your credit card bills on time and in full, and you will find credit cards to be a boon.
4. Limited Lounge Access
Nowadays, most prestigious credit cards come with easy access to airport lounges all over the world. Depending on the tier of your credit card and the status that it holds, it could offer multiple entries to such lounges at no additional charge.
Now, when you are delinquent on your credit card payment, you risk this privilege being taken away from you.
Yes, for some folks, especially non-air travelers, this might not be much of a deterrent per se, but for those who do – and are used to easy access to airport lounges on their travels – this can be quite a bummer.
So, if you want to retain this privilege, ensure that you avoid late credit card payments by paying your credit card bills on time.
5. Loss of Credit Card Reward Points
Most credit cards offer reward points for their usage. The rules differ and the number of points that are credited on select transactions vary widely, but the basic rule of thumb remains the same: reward points are offered that are accumulated each time you use your credit card.
These points can, in turn, be redeemed for a very wide range of purposes. For example, you can redeem against air travel with the points alone (depending on how many you have accumulated).
Now, if you resort to late credit card payments, the bank may very well reverse the points you have accumulated, possibly even negating them altogether.
This is a big risk you carry when you do not pay your credit card bills on time; so to reiterate what we have emphasized throughout this post, make sure that you avoid late credit card payments.
6. Loss of Peace of Mind
With late credit card payments and possible persistent follow-ups from the bank, your overall peace of mind would be at stake. As it is, there is every chance that any or all the aspects we have touched upon above would be applicable.
Those alone tend to wreak havoc on our overall well-being. Under those circumstances, to be harassed persistently by bank authorities for credit card payment would be the last thing you would want.
Conclusion
Late credit card payment is undoubtedly a “cardinal sin” of credit card ownership and usage. As the abovementioned points have proven, if you are a person who is unlikely to be in a position to make timely credit card payments on an ongoing basis, then you are better off not having a credit card in the first place than doing so as a “payment delinquent” from the outset.