There are many reasons hard-working people fall behind on paying bills. In the short-term, it might seem like missing a payment or two is not going to affect you in the long run, but missing a credit card payment could be a bigger deal than you may think. A payment becomes late if it is received after the designated due date or if the payment received is less than the minimum amount due listed on the billing statement. The actions creditors take to respond to late payments can affect you for months, or even years, to come. At Veitengruber Law, we use our expert knowledge of debt management to help you get on top of your finances so that making late payments
stops becoming a problem for you.
Once a payment is considered late, your creditor will charge a late payment fee on your next billing statement. Late fees typically range from $15-$35 depending on the late fee policy specific to your credit card company. If this is the first time you have been late in your payment, you may be able to get your creditors to agree to waive the late fee under an accidental late payment. If not waived, a recurring late fee will be charged every month a payment is late or does not meet the minimum payment requirement.
After 60 days, creditors will likely increase the interest rate on your account. Most credit card policies indicate a penalty rate which is the highest interest rate for your credit card. A higher interest rate will increase your monthly finance charges, not only making it more expensive to carry a balance between statements, but also making it likely that it will take you much longer to pay off your balance. You may also be barred from using your card rewards, or you may lose those awards completely.
After six months of on-time payments, your creditor is required to return your account to your pre-penalty interest rate. However, this is where it is important to know the specifics of your policy. Some credit card companies include a policy to continue to charge purchases made during the penalty period under the higher penalty rate.
The biggest effect of late or missed payments
, and what you most want to avoid, is losing points to your credit score or getting a bad mark on your credit report. After a payment is 30 days late, it will appear on your credit report. Once an entry is added to your credit report, it can remain there for up to 7 years. Missed payments are added to your credit report in 30 day increments until the account reaches 180 days delinquent. At this point, creditors will charge-off your account, meaning the credit card company writes-off this account as a loss. A charge-off does not mean the debt goes away. Often, the creditor will turn over the debt to a collections agency and the charge-off will appear as a negative mark on your credit report.
Payment history makes up 35% of your credit score—meaning late payments can take a serious toll on your credit score and make it difficult to get approved for new credit in the future. Generally, the better your credit, the more points you are likely to lose after a late payment. To avoid damage to your credit score or your credit report, you can make the full payment plus the late fee before the first 30 days are up. There are many options to manage your debt before a late payment is counted against you. Our experienced team
is there to help you explore all your options.
Veitengruber Law offers comprehensive debt solutions specific to your unique circumstances. Our legal team understands the stress and anxiety of unmanageable debt. We provide an all-inclusive analysis of your debt and offer knowledgeable solutions to your specific problems. Our goal is to give you the tools for a brighter financial future. Contact us today to get your free debt relief evaluation