Even the most meticulous folks have missed credit card payment at least once. Maybe they were on vacation, maybe they overlooked their credit card bill, maybe they didn’t have money, or they simply forgot! The point is, it happens.
The reasons are endless but the fact remains that many of us at some point or the other have missed credit card payments. Sure, life happens and we all make mistakes every once in a while.
However, this mistake can be quite costly. Even in instances where it only happens once, the harsh consequences may impact you for a while. This article will share the undesirable consequences that come with missing credit card payments so you can avoid making them.
Lower Credit Limit
Missing your credit card payment can lower your credit limit. If you repeatedly miss credit card payments or habitually make late credit card payments, your credit limit is almost certain to be revised to a lower level.
This is a particularly undesirable consequence for many who plan their lives in such a way that the current credit limit they have is crucial to their current lifestyle. Some people also rely on their credit cards for the timely payment of all other dues and liabilities. A reduced credit limit could mean having to completely recalculate their lifestyle.
Damage to Your Credit Score
Again, this is often a surprise to many but the fact is that even a single missed credit card payment can have a negative impact on your credit score. Credit activity is monitored and reported all the time. Even when you miss making your credit card payment on time just once it is documented.
This effect cascades when you repeatedly miss making credit card payments. That is a major reason not to miss making credit card payments ever. Even if money is tight, try to pay at least the minimum amount on time.
Late Fees / Non-Payment Fees
If you have missed a credit card payment, you will be liable to pay a late fee. In some cases, banks also charge additional fees for non-payment, which is distinct from late fees.
All too often, customers who miss making their credit card payments are folks who tend to revolve credit, which means they do not pay their entire outstanding balance but instead choose to make small payments. Naturally, this means they incur interest charges and possibly other fees as well.
It is for this reason that it is best not to miss credit card payments. You can set up an auto-debit facility with your bank account. This way, at least the minimum amount is always paid straight up without any qualms.
Higher Interest Rate
Once you have missed a credit card payment, banks often adjust interest rates to a higher rate. This is especially true in cases where they might have been charging an exceptionally lower rate based on good credit history.
After missing a credit card payment, the bank may decide you are not as trustworthy as they originally thought. The bank can raise your interest rate if you are not exhibiting financial responsibility.
Privileges Taken Away
The final negative aspect related to missed credit card payments is the possibility of privileges being taken away from you. For instance, you may have been granted complimentary membership to a certain club through your credit card. This membership can be revoked if you do not meet expectations.
Conclusion
To the furthest extent possible, avoid being in a situation where you have missed credit card payments. Try and make sure that at least the minimum amount due is always paid on time. It is wise to set out automatic payments, so the pressure is not all on you each billing cycle.