It is a situation we’ve all found ourselves in at one time or another. It is the end of the month and the confluence of bills is more than we can handle. We have to pay our rent or our mortgage, that’s always first on the priority list. Next come utilities since we can’t function without lights or water. That almost always leaves the poor, disrespected credit card as the last option to pay. But not paying your credit cards on time can dramatically affect your current financial standing. Let’s take a look at how late credit card payments can destroy your credit and lead to even more financial problems down the road.
The problem with late credit card payments is the fact that credit cards are connected to your credit report. A credit report is a document that lists your current credit score and all of the credit problems you’ve had over the past 10 years. Why does this matter? Because when you apply for credit, including a credit card, a car loan or a mortgage, the banks that offer you the credit take your credit score very seriously. And nothing negatively affects your credit score like late payments on your current cards. But having a negative report sent to your credit bureau is only the beginning of your problems if you miss credit card payments or are late on them.
Many cards act like predators just waiting to take advantage of your bad luck. While most cards do not behave this way, many of them have built in boosts in interest rates that take effect even if you are only one day late for your payment. Rates can spike as high as 24-percent or higher depending on the laws in your particular area. Even if your interest rate is in the single digits before, if your payment is so much as a single day late, your card company will likely raise your rate as high as they can.
It doesn’t take a rocket scientist to realize what this does to the viability of your card. If you were having trouble making payments before, having an interest rate that is now twice what it was before isn’t going to help you any. And if you started out with a sub prime card or a card with less than ideal rates to start with, you may be facing even more problems. Some cards have excessive fine print that outlines what happens when you miss payments, and some cards have incremental penalties that take affect with each additional late payment. Some cards will increase an annual fee and some might start one out of thin air.
If you aren’t sweating bullets by now, you might want to go back and read the above paragraphs. The point of all this fear mongering is to help each and every credit card holder realize that missing card payments or even being late on them is never, ever a good idea, and that your credit card payments should never be the last priority when it comes to paying your bills. The consequences are too dire if you do.
