Late credit card payments are one of the most common ways that people get themselves into debt and incur unnecessary expenses. When you miss a credit card payment, a few things can happen including acquiring interest, late fees, and even interest rate increases. It is important to be on top of your credit card payments because not only is it good for your credit, but it saves you money in the long run! Lets talk about what you should know about late credit card payments.

When Is A Credit Card Payment Considered Late?

A credit card payment is considered late when it is not received by the due date specified on the cardholder's billing statement. This due date is the date by which the cardholder is required to make a minimum payment on their credit card balance. The exact timing of when a payment is considered late will vary depending on the terms and conditions of the credit card issuer.

Typically, credit card issuers will allow a grace period of a few days after the due date before they report a payment as late to the credit bureaus. However, missing the due date or making a payment that is less than the minimum required can have serious consequences for the cardholder's financial situation.

There are exceptions to when a credit card payment is considered late.

• Grace Periods:Some credit card issuers offer a grace period, which is a set amount of time after the due date during which the cardholder can make a payment without incurring a late fee. As long as the payment is received within this grace period, it will not be considered late.
• Payment Allocations: Some credit card issuers allocate payments to the balances with the highest interest rates first, rather than applying them to the balance with the due date. In this case, a payment that is received after the due date may not be considered late if it is applied to a balance that is not due yet.
• Payment Disputes: If the cardholder is disputing a charge on their credit card account, they may be able to temporarily withhold payment on that specific charge while the dispute is being resolved. In this case, the payment may not be considered late, as long as the cardholder is working in good faith to resolve the dispute.

What Happens When You Are Late On Credit Card Payments

First and foremost, making a late payment can result in late fees being charged to the cardholder's account. These fees can range from a few dollars to a percentage of the balance owed, depending on the credit card issuer's policies. These fees can add up quickly and make it more difficult for the cardholder to get their finances back on track.

In addition to late fees, making a late credit card payment can also result in an increased interest rate on the cardholder's account. Many credit card issuers have a policy of increasing the interest rate on a cardholder's account if they make a late payment. This increase in the interest rate can make it more expensive to carry a balance on the credit card, which can further exacerbate the cardholder's financial situation.

Some credit cards will start to acquire interest when you pass the payment grace period, charging you interest based on the amount of your outstanding balance and your annual percentage rate (APR). This can be incredibly detrimental to your financial wellness as you are losing even more money on your outstanding debt.

Finally, making a late credit card payment can have a negative impact on the cardholder's credit score. Credit card payments are reported to the credit bureaus, and a history of late payments can indicate to potential lenders that the cardholder may not be a responsible borrower. This can make it more difficult for the cardholder to obtain new credit in the future, or may result in higher interest rates on new loans or credit lines.

How To Make Credit Card Payments On Time

With how important it is to make credit card payments on time, lets talk about some tips so that you don’t miss any payments in the future.

Here are some tips to help ensure that you always pay your credit card bill on time:

• Automate your payments: Many credit card issuers offer the option to set up automatic payments from your checking account. This means that the minimum payment or the entire balance will be automatically paid on the due date, eliminating the need for you to remember to make a payment.
• Set reminders: You can set reminders on your phone or calendar to remind you of the due date for your credit card payment. You can also sign up for text or email reminders from your credit card issuer.
• Use mobile banking:Most banks and credit card issuers now offer mobile apps that allow you to manage your accounts from your smartphone or tablet. You can use these apps to view your credit card balance, make payments, and set up alerts and reminders.
• Make multiple payments: If you have a large balance on your credit card, consider making multiple smaller payments throughout the month, rather than waiting until the due date to make a single large payment. This can help you stay on top of your credit card balance and avoid missing a payment.
• Pay more than the minimum: If possible, try to pay more than the minimum payment each month. This can help reduce the balance faster and lower the amount of interest you pay over time.
• Plan ahead for irregular expenses: If you know you will have irregular expenses coming up, such as a vacation or holiday shopping, plan ahead and set aside funds in advance so that you can make your credit card payments on time.

By following these tips, you can help ensure that you always pay your credit card bill on time and avoid the consequences of late payments.

What To Do If You've Been Missing Payments

If you have been missing payments and have acquired some interest, you can still recover. Here are some tips to help you recover from acquiring interest on a credit card bill:

• Make a budget: Start by creating a budget to see exactly how much money you have coming in and going out each month. This will help you determine how much you can realistically afford to pay towards your credit card debt each month.
• Pay more than the minimum payment: Paying only the minimum payment will only prolong the time it takes to pay off your debt and will result in paying more in interest over time. Try to pay as much as you can afford above the minimum payment.
• Prioritize high-interest debts: If you have multiple credit cards, focus on paying off the one with the highest interest rate first, as it is costing you the most money. Once that is paid off, move on to the next highest interest rate card.
• Look into balance transfer options: If you have a high-interest credit card, consider transferring the balance to a card with a lower interest rate. Just be aware of any transfer fees and make sure the lower rate is for a promotional period and not permanent.
• Avoid using your credit cards: Try to limit your use of credit cards and instead use cash or a debit card for everyday purchases.
• Seek professional help: If your debt is becoming overwhelming, consider speaking with a financial advisor or a credit counselor. They can help you develop a plan to pay off your debt and avoid future financial difficulties. At Financial Footwork, we are passionate about helping individuals with their finances and reaching their financial goals. We are here to help guide you with your finances with our classes for beginners to experts!

Remember, recovering from acquiring interest on a credit card bill takes time and discipline, but with a solid plan and commitment, you can become debt-free.