With 33% of American adults having zero savings for retirement, it can be even harder to make payments on time for your debt. Whether it’s student loan, mortgage-debt or your credit card payment, it is important to have a stringent plan and rigid budget that you stick to.
If you allow for a little flexibility, you can end up prolonging the time you have to pay your loans. This can mean paying even greater amount of money in interest over the years and can be financially crippling for you.
Around 60% of Americans have credit card debt and 37% claimed that the debt carries each month. There could be several reasons for you to have missed your credit card payment. Maybe you were busy taking care of other loan repayments, it slipped your mind or you prioritized more urgent payments, or there was an emergency which drained your resources.
Let’s take a look at what this means for you and where you should go from here.
What happens when you miss a payment?
The cut off period for credit card payment depends on each company but it is usually set at 30 days. Any later than that and you might face the following repercussions:
You will have to pay a late fee
This amount is dependent on the late fee policy for your credit card company. It also matters if it’s your first time paying late in the last six months or has becoming a habitual practice.
The company will charge you a higher interest
On top of the late fee, a creditor can also impose a higher interest if your late payment is more than 60 days late. They can also make this the maximum interest rate and this can make it even more expensive to carry the credit charge.
Late payments show up on your credit score
A late payment of 30 days can be added to your credit report and stay there for up to seven years. This can continue as long as you delay the payments.
You can lose on hard earned credit rewards: All the points you were collecting to cash in on the next time you took a well-deserved vacation? You can lose out on those and this can seriously damper your long-term plans.
You can go into credit card default
This is the final step of delaying payments for over six months. Your credit card account is written off as a loss and the record is maintained on your report for seven years.
This means that the next time you apply for any kind of loan, your credit report may not be in the best shape. The best solution for you at this point is to seek professional services. You can avail free credit consultation at Masters Credit Consultants. We also offer credit repair services in South Carolina.