Paying your credit card bill late will cost you dearly. A fee will be added to your outstanding balance which will then accrue interest. One or more late payments can also result in the penalty interest rate being applied for the next six months. This rate is usually in the region of 27% on most credit cards and can override a cheap introductory rate, thus negating any benefits obtained for those who have opted for a low interest rate balance transfer card to transfer their debts.
The absolutely best way to ensure that you never incur a late fee is to pay your credit card bill by automated debit. Naturally of course you need to ensure that there are sufficient funds in your account to meet the payment. The recent credit card reforms brought some changes in to aid consumers by standardizing the time when payments count as paid, thus banks can no longer charge you a late fee if your payment is made at 4.55p.m on the due date by saying the cut off time was 3p.m.
Nevertheless some credit card providers are still collecting handsome funds in late payment fees from delinquent borrowers who fail to make the payment on time and go on to pay the late payment fee. If your pay day does not coincide with the date on your credit card statement then make arrangements to have the billing date amended.
There was good news for delinquent payers from the 22nd August 2010 when further credit card reforms saw a hefty decrease in the amount which lenders are allowed to charge in late payment fees. Previously many lenders charged a standard $39 but this has now been eliminated. Banks are no longer be able to charge more than the minimum payment on your card as a late fee. Late payment fees are capped at $25 unless you are a regular late payer in which case the cap does not apply. Anyone who makes a late payment twice in a six month period can be charged up to $35.
Credit card customers who opt not to pay by automated debit can make payments on line to their credit card issuer or by telephone with a card. However if you are the forgetful type a simple error on your part is still going to be an expensive unnecessary cost, so the value of automated payments cannot be stressed highly enough.
Paying late of course has other consequences as well as financial. All late payments will be recorded on your credit file as an accurate reflection of how you handle your payments on credit. As your credit score will decrease if you pay late so will the cost of future borrowing increase, and you may find that only sub prime lenders will welcome your future business. The most preferential interest rates will be denied to you and your insurance premiums could rise.
If you are suffering genuine financial hardship which is causing late payments then contact your lender and see if there are any payment options open to you or arrangements that you can come to. If you simply pay late then your balance will obviously increase as the late payment fees are added and then charged interest.
If despite everything you still attract late payment fees then maybe it’s time to hang up your credit cards until your finances are under better control. In some instances it will cost you less to take an immediate cash payday advance loan to ensure your credit card payment is made on time, than to simply do nothing and accept the late payment fee.