Late Payments on Your Credit Card – Consequences, Impacts, and Tips to Avoid Late Payments

Late payments on your credit card occur after the due date, and late fees of up to $40 will be imposed, resulting in a negative impact on your credit score.

Paying the minimum amount can prevent the account from going into default. After 30 days, your credit card’s late payments will be reported to the credit bureau.

The Consequences of Credit Card Late Payments

Late credit card payments or missed ones tend to have different outcomes depending on the level of lateness. Although getting the payment one day late may not have severe consequences, any form of payment that is 30 days or more late can attract penalties towards the investment and your financial condition.

Let’s explore the common results in detail:

01. Late Payment Fee

The first penalty for missing a credit card payment is a pricey late payment fee, which can be up to $41 for most cards.

How It Works

Some issuers may charge a lower amount, typically $25, in the first instance of lateness. But if you have missed payments repeatedly over six months, then the legal fee rate becomes applicable.

Example: Let’s say your credit card payment is due on the 15th, and you fail to make it. On the 16th, your issuing company may charge an extra $30 for being late on your payment. If your payment history reveals several delayed payments, the fee reaches $41.

• Waiver for First-Time Offenders:

First-time offenders may find that some credit card companies, such as Citibank or Discover, might not charge the fee as a one-time grace. However, this is only sometimes the case, so it is wise to consult with your issuer.

02. Penalty APR

One late payment could result in a penalty APR, which is a much higher interest rate charged to the overall balance.

What is a Penalty APR?

A penalty APR is an APR that credit card issuers apply when you fail to honor the terms of your credit card contract. The issuer can apply a penalty APR if you Pay nothing for one month, pay your bill even later, and go over your credit limit.

Currently, most credit card issuers regulate the maximum penalty APRs but with an impressive capital rate of 29.99%.

• Duration of the Penalty:

The penalty APR isn’t imposed indefinitely. According to the Credit CARD Act 2009, your account should be reviewed if you made on-time payments for at least six months. They are supposed to restore the regular APR if you have been making consecutive, timely payments on previous cycles.

Example: For example, if you charge $5,000 on your credit card and the APR is 18%, and you fail to clear your bill on time. If you’re charged a penalty APR, the rate can go up as high as 29.99%. This means that instead of charging you $75 in interest monthly, they would charge you $125 for interest, and this would be very hard to pay the debts.

03. Cancellation of Introductory 0% APR Offers

If you are in the middle of the grace period that comes with being a new cardholder, some credit card companies offer 0% APR initially. However, a single missed payment can annul this offer.

What is 0% APR?

A 0% APR credit card means no interest on the balance you’ve carried over for a certain period. APR is an abbreviation for annual percentage rate, which is the annual interest on a credit card.

• How It Works:

Promotional deals include a zero percent interest rate for 12-18 months on purchases or balance transfers. However, this benefit often comes with a condition: timely payments.

Even one month’s delay in making a payment means that the 0% introductory rate is no longer available, and the remaining balance will start to be charged at the card’s regular percent annual rate.

Example: Suppose you have shifted $5,000 to a new card, which has a zero percent interest on the balance transfer for the next 15 months. If you fail to make the third payment, the issuer may cancel the promotional APR, and the balance would, from that time, attract normal interest of 20%.

Over time, this could translate into hundreds and thousands of dollars worth of additional expenses.

04. Reporting to Credit Bureaus

The general rule is that payments less than 30 days late will not be reported to the credit bureaus, while payments 30+ days late can greatly negatively affect your credit.

Credit Impact

A payment that is made after 30 days will drastically reduce your credit score by between 60 and 110 points based on your credit background.

• How to Avoid This:

It’s a good idea to take action immediately if you are sure that you have paid a particular bill late for any reason. Before it gets to this stage, ensure that you pay the overdue amount so that long-term harm does not happen.

05. Loss of Rewards or Benefits

Credit cards may have rewards schemes like cash back or redeemable points for travel, meals, and more. However, a single payment delay can cause these benefits to be lost for several days.

Example: With a cash-back credit card providing 2% cash back on all purchases, one risks incurring losses of cash-back bonuses due to an inability to earn or cash in on bonuses due to overdue balances.

Impact of Missing or Late Payments in Credit Cards on the Credit Score

Late or missed credit card payments hurt your credit score, and the later they are made, the worse the effect will be. Here, we have illustrated how the credit card missed payment for 30 days and 90 days will impact two people based on their FICO scores.

	James	Olivia
Current FICO® Score	600	750
Result of a 30-Day Missed Payment	570-590	710-730
Credit Score Drop for 30-Day Missed Payment	10-30 points	40-60 points
Result of a 90-Day Missed Payment	530-550	630-650
Credit Score Drop for 90-Day Missed Payment	50-70 points	100-120 points

The above example also concludes that the more credit you possess, the greater the effects of making a late payment.

How Late Payments Affect Credit Scores

Now, let’s compare the effects of a missed payment between two people: the first with a worse credit history and the second with a better credit history.

James’ Situation (Lower Credit Score):

James’s current FICO score is approximately 600, which is adjudged to be fair. According to the violations, in the worst case, when a consumer misses a payment for 30 days, his rate will decrease from 630 to 590 — 570.

If he fails to make a payment for 90 days, his score will again be lowered by 50-70 points and may fall to 530-550.

Nevertheless, those few points that separate James imply that a missed payment is not as big a hit as it might be to a person with a better score.

However, it distorts his creditworthiness regarding future credits since all lenders will consider him a high-risk taker.

Olivia’s Situation (Higher Credit Score)

Olivia’s credit score is currently 750, which is good credit. According to her, if she misses a payment for 30 days, her score will be reduced by 40-60 points, and she will end up with a score of between 710 and 730.

However, if she fails to pay her credit card bill and is 90 days behind on her payments, her score could decline by 100 to 120 points, which could take anywhere between 630 and 650.

Olivia’s drop is greater because she began with a higher credit score, and a skipped payment affected her credit score more deeply than James’. Such a drop means that it may barely reach 100+, which may impact her ability to qualify for better loans or credits.

Why Does a Higher Score See a Bigger Drop?

Missed payments have a far greater impact on Olivia’s credit score because she is likely to be one of the individuals who has maintained a relatively higher credit score, which implies that she has been outstanding in managing her creditworthiness.

When you build a good credit reputation, a missed payment is considered a very serious sign for a credit provider. It indicates that you are likely to be among the first to default in the future.

On the other hand, James, who has a low credit rating, probably saw some marks in the credit report.

The extra missed payment does not result in as steep a decline because the score for the conducted assessment already takes into account the subject’s behaviour.

How to Avoid Late Payments on Your Credit Cards

Generally, late payments affect your credit score, as well as the fees and interest rates that you would be charged. Fortunately, there are some methods you can employ so that you don’t lapse into missing a payment.

Here are some real-world tips to stay on track and manage your credit card accounts responsibly, plus how some of the largest US-based banks and credit card issuers provide payment options and payment reminders.

01. Set Up Autopay

Some of the simplest methods to prevent themselves from paying their dues later include opting for auto credit payment.

All major credit card companies, like Chase, Citi, American Express, and Capital One, have provisions wherein you can make automatic payments of either the minimum amount payable or the amount in full.

• What to do: Go to your credit card account and set up automatic payments of a specific amount, such as the minimum or the full amount, for the due date.
• Benefit: This helps you make regular payments without having to remember when and where to look for the bill.

02. Use Calendar Reminders

Suppose you wish to refrain from automating payments and want the program to remind you about a payment to be made. In that case, the calendar reminders will alert you in advance, preferably 2-3 days before the scheduled date.

• What to do: Create a notification on either your mobile phone, an email, or a physical calendar at least three to five days before the due date.
• Benefit: It gives you enough time to make the payment manually and avoid late fee charges.

03. Early Payment, Not the Due Date

Take your time before the due date, as it attracts extra charges. This is particularly so because it will give you a head start in the event there are complications in processing or transferring the amount in question.

• What to do: If you wish to use a bank transfer or third-party payment application, pay at least two or three days before the due date.
• Benefit: This will help you have enough time for your payment to be processed without encountering some wrongs.

04. Bill Time Reporting

Learn when your billing cycle ends and when your payment is due. Most credit card companies, such as Bank of America, Discover, and Wells Fargo, mail statements 21 to 25 days before the due date, but you should learn your cycle dates.

• What to do: Put the statement date and the due date of payments in a calendar or phone app.
• Benefit: This one helps you manage your finances correctly and pay the bills on time.

05. Set Payment Alerts

Most credit card companies, including Chase, Citi, and American Express, to name but a few, will send payment-due notifications and balance notifications based on your preferred amount.

• What to do: Go to your credit card account and register for email or text notifications on payment due, low credit balance, etc.
• Benefit: Notifications will remind you of the payment status, and no payment will be missed.

06. Monitor Your Expenses and Your Account Statement

A healthy financial balance in which a person should closely monitor expenses and meet the due amount required as payment.

An increase in spending often results in payment beyond your anticipated amount or even an inadequate balance in your account.

• What to do: You can check through your card’s mobile application or directly on your chosen online banking platform. Lenders such as Chase, Citibank, and American Express have apps for organizing expenses and receiving reminders.
• Benefit: If you keep track of the various costs you incur, you will be able to make payment at the right time, avoiding a rude shock.

07. Set Up a Payment Buffer

If the credit card payment is becoming a concern, then keep aside a reasonable amount in your checking account so that when the due date arrives, you have sufficient balance available to make the payment.

• What to do: Just ensure that you keep a certain amount of money in your account for your credit card payment.
• Benefit: This means that one’s credit card standing is prepared for situations where one may need to withdraw large amounts of cash or accidentally forget to make payments.

08. Inform Your Credit Card Company

If you realize that you are unable to make a payment, you should contact your issuer as soon as possible.

Some of the largest players in this business, including Capital One, Wells, Fargo, and Discover, provide some help for those who have missed a payment, including extension and hardship programs.

• What to do: Check with your credit card company or use the app or online portal to see if you can extend your due date or change your payment schedule.
• Benefit: This could allow you to be aware of possible penalties or additional charges, while the fee would allow you to make your payment more comfortably.

09. Consolidate Your Payments

When you have many credit cards, paying the bills on each one can be quite complicated. Consider transferring balances or consolidating your credit cards.

• What to do: A balance transfer credit card with an initial 0% interest rate should be sought from Chase, Citi, or Bank of America and used to pay off high-rate balances.
• Benefit: You make only a single monthly payment and do not lose track of how many payments you have made.

10. Read the Credit Card Terms Frequently

The terms of the credit card may also change, such as the due date, the minimum payment to be made, and so on.

One should always be aware of the changes concerning the credit card that you have been issued.

Companies such as American Express, Discover, and Wells Fargo send out statements and alerts about any changes to the terms of your account.

• What to do: Check your credit card statements and read any notices from your issuer regarding changes in your payment policy.
• Benefit: This way, you will always keep track of your payment responsibilities and should not miss any changes to the minimum payment or the due date.

Measures to Take When You Miss a Payment

Failing to make a credit card payment can make one nervous; however, the best thing to do is to stay calm and act fast. It is always advisable to clear the missed payment as early as possible so that it will have a negligible effect on your finances.

If you have missed a payment for the first time or you are aiming to prevent it in the future, there are measures that you can observe so that you can reduce the impact of the damage.

Here are some measures you can take right now—from making the payment immediately to contacting your issuer to get your credit score back on track.

1. Make the Payment Immediately: If you discover that you have missed a payment, you should make it as soon as possible. It is always good to make the payment quickly before the grace period, as it helps minimize future fees and interest rates.

2. Contact Your Credit Card Issuer: If you were a few days late with payment, you should immediately contact your issuer. Some issuers may provide a one-time late payment fee exemption or may be inclined to do so if you explain the circumstances.

3. Check for Fees: Check your credit card statement for overdraft fees or if your APR has been increased because of the delay in payment. If you are charged fees, try to ask your issuer to remove them, particularly if this is your first time paying a bit late.

4. Monitor Your Credit Report: If your payment is more than 30 days behind, it is likely to be reported to the credit bureaus, which impacts your credit score. You can get a free annual credit report to see if a change has been made.

5. Set Up Payment Reminders: To prevent payment failures in the future, put alarms on your phone or an alert app from the credit card company. You can also consider automating payments to ensure that they are made at the right time.

6. Plan to Avoid Future Late Payments: Check your budget and devise a strategy to avoid this kind of situation in the future. You should cut your budget a little or talk to your issuer about entering into a payment plan.

The Bottom Line

Late payments also do not help. They accumulate the outstanding balance on a credit card, which could harm the credit. Penalties are also charged, and interest accumulates as days pass without making the necessary payment on the credit card statement.

If you have missed a payment or would like to request a change in some due date, then you need to address your issuer.

If credit card bills become a challenge to pay occasionally, don’t worry—there are other alternatives. One involves transferring your balance to a credit card with a 0 percent interest rate on balance transfers for a certain period.

Another relaxation that one qualifies entails is through a debt consolidation loan. However, these methods aren’t available to those with poor, average, or even fair credit scores.