Like any other asset in this world, credit cards can be a great one if handled with care but it can also prove to be disastrous if taken lightly. We know that it is a great way to boost your credit score if you use it well. In our previous blogs, we have talked about how credit cards affect your credit score. Today, let’s understand each point related to late credit card repayment and the impact that late credit card repayment might have on us-

Why do most people get late on credit card repayments?

Many people get late on their credit card repayments. To solve the problem entirely, we need to analyze why does it happen in the first place. Here are a few reasons why people get late on credit card repayments-

• Overspending:

  If you have seen the movie “Confessions of a Shopaholic”, you would understand what I mean when I say that a lot of people use their credit cards recklessly and do not think wisely about how they are going to repay the amount they are spending. When you overspend, it is obvious that you will get late on your credit card repayment.
  

• Delays beyond our control:

  This is not the most common cause of people falling behind on their credit card repayment but it still holds up. Sometimes, the repayments are dependent on the production of bills. Be it a purchase you made for your office whose reimbursement is pending. Or a friend that keeps delaying giving you the money they borrowed.

• Waiting until the last day:

  Many of us tend to wait until the last date to do things. Be it submitting an assignment or a credit card repayment. If you make it before the deadline, well and good. But if you do not, there are consequences. Some people also delay the payment till the last day to make the most of the interest-free period and then they forget completing their credit card repayment.

• Confusion:

  As humans, we make mistakes every day. Some are tiny while others like forgetting your credit card repayment date are huge. Owning multiple credit cards might also confuse you about the credit card repayment dates.

Related topic: How Closing Credit Cards Affects Your Credit Score?

What are the effects of late credit card repayment?

Now that we know the causes that lead to a delay in the credit card repayment, let’s have a look at what exactly happens when you get late in making the credit card repayment-

• Increased Expenses:

  This one is a no-brainer. If you fall behind on your credit card repayment, you will be charged a late fee according to the terms of your issuer and depending upon your card type. Also, you might end up coming in the bad books of your credit card issuer. This could mean an increase in your future credit card interest rates.

• A negative effect on credit score:

  By now, we know loud and clear about how credit cards affect your credit score. One huge factor that contributes to your credit score is your repayment record. Your credit card repayment default is bound to reflect on your credit report. And your credit score will be affected negatively.

• Loss of access to the card:

  Some credit card companies might also take away the access to your credit card for further payments. Of course, this is until you pay off the bills completely and with interest. But even then it can be highly inconvenient to lose access to your credit card. The main reason why is because you can get caught up in any kind of emergencies at any moment.

• Loss of earned rewards:

  The reason why you bought the credit card in the first place is that it presented exciting rewards and benefits. The rewards earned by you can be declared null and void if you fall behind on your credit card repayment. Also, the discount and offers might also slip away from your fingers. This depends majorly on the credit card issuer.

Related topic: Pros & Cons of Using Credit Cards

What to do if you missed the date?

Crying over spilled milk is something that we highly recommend against. Here is what you can do in case you are late in paying your credit card bills-

• Pay the Bill Immediately:

  Again, this goes without saying. As soon as you find about your credit card repayment delay, make sure that the prime focus in your financial life is to clear off that payment at the earliest. The more delayed the payment is, the direr the consequences are. Especially on your credit score and expenses.
  

• Negotiate a Fee Waiver:

  The biggest of problems in this world are being solved with words between great people as we speak. So there is no harm in trying to talk to your credit card issuer to show consideration towards you when you are late in your credit card repayment. Try to convince them that you have never been late before and this will not be repeated. If your image is clean, the issuer might choose to waiver your increased interests and other penalties.
  

• Automate Your Payments:

  What is the most important thing that one needs to do after they make a mistake? It is to ensure that the same mistake will not be repeated in the future. You should consider automating your payments. Especially if you are a forgetful person or you own many credit cards and get confused easily. Automating your payments might be a great way to ensure you never get late on your credit card repayment.

Related topic: How Does Paying Through a Credit Card Work?

Our two cents on credit card repayments would be that it should be avoided at all costs. Because for every late credit card repayment, you are losing out on your creditworthiness. Creditworthiness is the most important factor that any lender would consider before giving you a personal loan as it is an unsecured loan. You can lose out on chances of getting the best interest rates and offers due to a low credit score. Make sure you follow the methods mentioned above and ensure there are no late credit card repayment woes waiting for you.