In the short term, missing a credit card payment is expensive. You have to pay a late fee, plus interest on that fee. And on top of that, the interest on your unpaid balance keeps growing. But the consequences of missing a payment go beyond the money you’re charged right away. A missed payment can cause problems for you months or years into the future. Here’s why.
You Could Pay a Penalty Rate for Several Months
Some credit card issuers raise the interest you pay to a high rate called the penalty rate when you’re significantly late making a payment. USA Today notes that this rate can be as bad as 29.99 percent. That’s a steep price to pay, and what’s worse, you may be charged that extremely elevated rate for months until you make several consecutive payments on time. That means missing a payment now could result in higher credit card bills for months to come.
Missing a Credit Card Payment Could Hurt Your Credit Score
The credit card company may report your missed payment to the credit bureaus, especially if you’re more than a month late in paying or if you have missed other payments in the past. If that happens, your credit score will probably drop--and a lower credit score means you’re charged a higher interest rate the next time you borrow. Damage to your credit score can also hinder you from renting some apartments and disqualify you from auto financing offers. And as Equifax explains, once a missed payment has been added to your credit report, it can stay there for as long as seven years.
The Credit Card Company May Be Less Forgiving in the Future
Your credit card issuer might not contact the credit bureaus immediately after you miss a payment for the first time. But if you miss payments again, you can’t expect the same leniency. A history of missed payments will probably also lead the credit card company to be less accommodating should you ask to raise your credit limit or negotiate a reduced rate in the future.
As you can see, the consequences of a missed payment are serious and long-lasting enough that you never want to let a payment slide for a trivial reason. But what if you’re unable to pay because of an emergency? Fortunately, you may be able to prevent some of the bad consequences of a missed payment by contacting your credit card company as soon as you know you’ll be late. Tell the company representative if a hardship like an injury or a death in your family is causing you to miss the payment. If you can pay a small amount now, such as half of your minimum, offer to pay that. Finally, explain when you will be able to send the rest of the payment. The company is more likely to work with you and perhaps forgo contacting the credit bureaus when it sees that you are communicating and trying to pay as soon as you can.
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