Paying credit card bills on time is surely the most important step in maintaining a good credit standing.
Some cardholders may feel that occasional late payments are okay as long as they can pay off their past due debts later on.
Below are four of the worst consequences you may experiences for not paying debts on time:
1. Creditors and Collectors Run After You
Sooner or later, not submitting your payments on the scheduled date will have creditors and debt collectors running after you. This can prove to be a stressful and annoying experience especially if you need to deal with abusive debt collectors. So why put yourself in such a stressful situation when you can avoid it by being punctual with your payments?
2. Damages Your Credit Score
Will a few late payments on your part really have a negative effect on your personal credit score? The answer is YES! Let’s not forget that your FICO score is calculated based on several factors. Payment history comprises 35% of your total score.
If you already have a low rating, even a single late payment can pull down your rating by a few points. On the contrary, consistent payment can significantly increase your total
3. High Interest Rates and Penalty Fees
As a credit cardholder, you will be subjected to the high interest rate fees if you won’t pay off your balances on your due date. Add to this, your credit card issuer can increase your current APR if you’re a frequent late payer.
4. Legal Action
Debts that are left unpaid for too long can force a creditor to take a legal action against you. Going through such a scene will surely add worries and stress on your part especially since your personal credit history and reputation is at stake. Do not put yourself in this troublesome situation.
If you feel that you will not be able to beat your deadline due to financial crisis, the smartest thing to do is to speak with your creditor. Explain your situation and why you won’t be able to pay on time. Request for a new deadline of payment and work out a realistic solution so you can submit your payment on the date you promised.
Most credit card issuers would willingly make the adjustments if you give them the advanced notice.
Watch out your spending habits and make debt repayment your utmost priority. If it seems like your monthly salary isn’t enough to cover for all your debts and expenses, try to find a way around it. Perhaps you can cut back on your personal expenses, get a second job and recreate a more efficient budget plan.
If you’re finding it difficult to keep up with your credit card debt, clearly it’s about time to stop using your card for new purchases at least after you’ve managed to clear all your existing balances.
