Late Credit Card Payment? Here's What to Do

Nov 03, 2016 | Be First to Comment!

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We all have those moments. Either the due date flew by without us noticing or we simply struggled to make ends meet that month. One way or another, everyone misses a credit card payment once or twice. The problem is, missing even one payment can have a negative impact on your credit score.

So what should you do if this happens to you? Luckily, not all hope as long as you act fast. Here’s what to do if you’re late on your credit card bill.

What You Should Do If You’re Late on Your Credit Card Bill

A late credit card payment isn’t good, but it doesn’t have to be the end of the world. Here’s what you can do to take control of the situation:

1. Make Your Payment As Soon As Possible

If you’re late on a credit card payment or missed it altogether, don’t just wait for the next bill to come. Make a payment on your card as soon as possible. The sooner you do, the less chances it will have a negative impact on your credit score.

Here’s what you need to know about credit scores and late payments: a payment is typically reported to the credit bureaus if it’s 30, 60, or 90 days late. But if you get your payment in before that 30 days, you can rectify the situation before it hits your report.

2. Call Your Credit Card Issuer and Ask them to Waive the Fee

Believe it or not, if you were charged a fee for your late payment, there’s a good chance you can get it waived. Simply make your payment and call your credit card issuer. Tell them that it was a mistake and not one you intend to repeat, and chances are they’ll take the fee right off for you.

Here’s what not to do when you call: Don’t give a sob story. Don’t try to tug at their emotions or their sympathy. Don’t get angry. Don’t tell them all the details about your life and your finances. This won’t work.

Instead, be courteous and professional. Tell them that it was a mistake and that you have now made your payment, and since you’ve been a loyal customer for so long you’d greatly appreciate it if they remove the fee. Keep it simple and polite and your chances will be much better.

3. Make A Plan to Prevent this From Happening Again

Late payments happen to everyone - that’s one reason credit card companies are decently fair about removing fees. We all make mistakes sometimes!

But if it happens over and over again, then it will turn into a much larger problem. Continually missing payments could lead to a hike in your APR, less cooperation on fee removal, and even eventual default. If the latter happens, you’ll see a major dip in your credit score and you’ll have to deal with debt collection agencies.

A mistake happens once - but three, five, ten times is a habit. That’s why it’s important to make a plan of action now. The more you can do to prevent this from happening again, the better off you’ll be.

How to Make Your Payments More Manageable

If you’re ready for a plan of action, you might be wondering how to get started. If the late payment happened because you forgot it was due, the easiest fix is to sign up for automatically recurring payments on your credit card (many banks offer this in their billpay feature, as do a few financial apps).

But if it happened because you’re struggling to make ends meet, then there’s something else you should do:

Lower your interest rate.

The most pernicious part of credit cards is high interest rates that make a balance carried over month to month difficult to pay off. Compound that by a few years and you might feel like you’ll never get out of the hole. But lower your interest rate and two great things happen:

  • Your minimum payment due will decrease
  • Any amount you pay over the minimum will have more impact on your balance than the same payment made at a higher interest rate

So how can you lower your interest rate? Multiple ways! The most effective way to do this is to apply for a balance transfer credit card. Balance transfer credit cards are used to pay off an existing credit card and they come with an introductory period at a low interest rate. The rate is often 0% and the time period can go anywhere from six to 24 months.

To get one of these cards, all you have to do is select one and apply for it the same way you would apply for any other credit card. If you’re approved, you then follow the steps either on paper or online to transfer the balance from your other card onto the new one. Some credit cards do the balance transfer for free, while many charge a fee of approximately 3%.

After you complete your balance transfer, then you’ll want to create a plan to pay the card off before the introductory rate is up. Simply divide the balance by the number of months you have in your introductory period - that number should be your new minimum payment (regardless of the fact that your minimum payment on your bill will be less than that).

If you simply can’t do that, or if there are months you hit the target and months you miss, then you’ll want to plan on getting another balance transfer card before this one’s introductory rate is over. Otherwise, your remaining balance at the time of the end of this period could be charged at the new interest rate, which will remove much of the progress you’ve made on the balance thus far.

Keep in mind that you’ll want to get out of this cycle in hopefully 1-2 balance transfers. But it’s okay if you need more time as long as you stick to this plan. The main thing to remember is that your credit score will be the game changer - if your score dips down mid-balance transfer, then you may not be able to get another one when you need it.

Keep your credit score as high as you can by making every single payment on time, even if you can only pay the minimum due. Payment history makes up a large portion of your credit score, so this is an easy way to stay in good standing.

FICO Credit Score Factors and Their Percentages

FICO credit score factors Percentage weight on credit score: What it means:
Payment history 35% Your track record when it comes to making (at least) the minimum payment by the due date.
Amounts owed 30% How much of your borrowing potential is actually being used. Determined by dividing total debt by total credit limits.
Length of credit history 15% The average age of your active credit lines. Longer histories tend to show responsibility with credit.
Credit mix 10% The different types of active credit lines that you handle (e.g., mortgage, credit cards, students loans, etc.)
New credit 10% The new lines of credit that you've requested. New credit applications tend to hurt you score temporarily.

What if you can’t get a balance transfer? You may still be able to lower your interest rate. Simply call your credit card issuer and explain to them that you’ve been a loyal customer for some time but fear that you’re going to have financial difficulty if you can’t get the rate down. They don’t want you to default, so as long as you’re courteous about it and can show a good history with them, they may just lower your score. It’s not a guarantee, but you lose absolutely nothing by trying.

If you try some of these things and they don’t work today, keep making your payments on time. In a few short months, hopefully, your credit score will go up and you’ll be more likely to obtain these options. Just make those payments, don’t go deeper into debt, and keep trying to lower your interest rate.

Negative Effects of a Late Credit Card Payment

It can be hard to stay motivated when paying a large credit card bill that may feel like it will take years to get out of. That’s why it’s so important to understand what can happen if you do continue to miss payments.

Within one day of missing your credit card payment, the credit card company will post a late payment fee — which could be as expensive as $35 — to your account. That fee can potentially get removed, so it’s the smaller of the potential issues. The larger issue is the hit your credit score can take and, even worse, an APR increase.

Some credit card issuers have an automatic APR increase after a late payment. This is called a penalty APR. Unfortunately, this can go as high as 30%, which will only increase your minimum payment due and make it that much harder to make future payments. You want to avoid this as much as possible.

Percentage of Monthly Credit Card Payments Toward Interest

Scenario A1 A2 A3 B1 B2 B3 C1 C2 C3
Balance $5,000 $5,000 $5,000 $10,000 $10,000 $10,000 $5,000 $5,000 $5,000
APR 16.99% 16.99% 16.99% 16.99% 16.99% 16.99% 8.99% 8.99% 8.99%
Monthly payment $200 $500 $800 $200 $500 $800 $200 $500 $800
Time to pay off 2 years 8 months 11 months 7 months 7 years 4 months 2 years 1 year 2 months 2 years 4 months 11 months 7 months
Total principal paid $5,000 $5,000 $5,000 $10,000 $10,000 $10,000 $5,000 $5,000 $5,000
Total interest paid $1,215 $430 $274 $7,508 $1,841 $1,084 $557 $217 $141
Portion of monthly payment paid toward prinicipal 80% 92% 95% 57% 84% 90% 90% 96% 97%
Portion of monthly payment paid toward interest 20% 8% 5% 43% 16% 10% 10% 4% 3%
Total paid $6,215 $5,430 $5,274 $17,508 $11,841 $11,084 $5,557 $5,217 $5,141
Monthly payment to pay off in 1/2 the time $351 $875 $1,295 $307 $988 $1,511 $378 $855 $1,273

Thanks to the consumer-friendly Credit CARD Act of 2009, the increased rate will not apply to the existing balance. Nevertheless, the higher rate could end up costing you hundreds of dollars more in the future.

Small Habits Will Lead to a Much Brighter Future

The way you’re feeling right now after a late payment and some not so great news about potential consequences is understandable, but don’t let it get you down.

Simply making payments on time every month can greatly improve your credit score. And an improved credit score can lead to financial tools like balance transfer credit cards. Balance transfer credit cards can lead to a low enough interest rate to make some serious progress towards credit card debt payoff.

Just keep moving towards these goals and you will see the light at the end of the tunnel. It all starts with developing small habits now.

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