Missed Credit Card Payment- How to Avoid Late Payment and Fees Charged on Late Payment?

Do you use a credit card for daily expenses as well as other online and offline purchases? You are most likely used to paying your credit card bills on a monthly basis. But, have you ever missed or been late on a credit card payment?

Missed or late credit card bill payments have a variety of ramifications. This article will explain how late payments can have a long-term impact on your finances.

If a credit cardholder fails to clear dues three days after the due date, a late payment fee is assessed. The late fee is usually added to the following billing cycle. Banks and credit card companies typically charge a fixed late payment fee based on the outstanding balance. The late fee increases with the amount of the bill. The number of days past due and late payment charges will be calculated from the payment due date listed on the credit card statement, according to the RBI. According to the regulator, penal interest, late payment charges, and other related charges will be levied only on the outstanding amount after the due date, not on the total amount.

Pay credit card bills on time

Credit cardholders are advised to pay their bills on time unless there is an emergency or a financial crisis. Missing the credit card bill due date could have serious consequences. Your credit score will suffer greatly, and your credit account will be marked as a defaulting one on your credit report.

How to Avoid Making Late Payments?

1. Set up automatic payments

Card companies offer an easy way to avoid late payments: autopay. You can set up autopay in less than a minute and have peace of mind knowing that your credit card payment is on time. Autopay can be set up for the minimum payment due, the total balance on your statement, or another amount. We recommend setting it to your total statement balance to avoid interest charges, but if that isn't possible, set it to the minimum due.

2. Make payment reminders.

If you do not want to use autopay, you can set up calendar reminders as well as text and email alerts. Many credit card companies allow you to set up reminders for when your statement is available and when your payment is due in a certain number of days.

3. Change the due date of your payment

If you have several bills to pay, your due dates are probably spread out over the month. This may increase your chances of missing a payment, so adjust your payment due dates as necessary. It may be advantageous to have them on the same day or shortly after you are paid.

Why should you avoid late payments on your credit card bill?

1. Late fee is charged

Customers are charged a late fee if they do not pay their credit card bills by the due date. This late fee will be applied to your next credit card bill. Late penalties differ from one credit card company to the next and can be based on a variety of factors such as the number of days you have delayed the payment, your previous late payment history, and more.

The Reserve Bank of India recently issued a notice to all banks stating that the late fee should be charged only when the payment is due for more than three days after the due date.

2. Negative impact on your credit score.

Your credit score is used by banks and other lenders to determine your creditworthiness. Simply put, the higher your credit score, the more likely it is that your loan and other banking requests will be approved. When you fail to make credit card payments on time, your bank notifies credit reporting agencies, which affects your credit score. Delayed/late payments lower your credit score, making it more difficult to obtain new credit from the same or other lenders. A low credit score not only causes loan applications to be denied, but it can also result in high interest rates on future loans.

3. Limit reduction on your credit card

Missing or delaying credit card bill payments on a regular basis may cause your bank to reduce the available credit limit on your card. This, in turn, limits your spending power.

4. Not taking advantage of the interest-free credit period

If you miss or delay your credit card payments, the bank may revoke the interest-free credit period on your card. Most banks offer an interest-free credit period of 25 to 30 days during which you can use your card to make purchases without incurring interest. However, if you fail to make timely payments, your bank may withdraw this facility.

What should you do if you fail to pay your credit card bills on time?

If you are a responsible credit card user who pays on time, contact your bank immediately to pay off the outstanding bill amount. You may also ask the bank representative to waive the late fees. Most banks frequently reverse late-fee charges for one-time delays. While it is true that failing to pay your credit card bill once does not immediately lower your credit score, you should be extra cautious in the future. Repeated instances of late payments have a negative impact on your credit score, causing it to fall.

What should I do if I don't have enough money to pay my credit card bill?

If you are unable to pay your bill on time due to a lack of funds, make sure to discuss this openly with your bank. Most banks provide customers with an alternative way to settle credit card debts, such as a personal loan or other repayment mechanisms in which the outstanding amount is repaid in monthly EMIs. This reduces the interest burden on the outstanding amount and allows you to deal with the situation more efficiently.