How to Handle Late Credit Card Payments: A Comprehensive Guide

At O1ne Mortgage, we understand the importance of maintaining a healthy credit score and managing your finances effectively. Life can be unpredictable, and sometimes, you might miss a credit card payment. However, a late payment doesn’t have to spell disaster for your credit score. In this blog, we’ll explore actionable steps you can take to mitigate the impact of a late credit card payment and maintain your financial health.

Pay Your Credit Card Bill Immediately

One of the most crucial steps to take when you realize you’ve missed a credit card payment is to pay it as soon as possible. Credit card issuers typically report late payments to credit bureaus only after they are 30 days past due. This means that if your payment was due yesterday or last week, paying it today can prevent it from affecting your credit score.

However, if a payment becomes 30, 60, or more days late, it will appear on your credit reports and have a more significant impact on your score the longer it remains unpaid. Late payment records can stay on your reports and affect your scores for up to seven years. Therefore, paying at least the minimum due right away can minimize the negative impact on your credit.

Contact Your Card Issuer

Besides the potential effect on your credit, another consequence of paying a credit card bill late is the likelihood of being charged a late fee and possibly facing an increased interest rate, known as a penalty rate. Penalty rates are higher rates charged by some credit card providers when customers don’t pay on time or when a payment is returned. These rates can be as high as 29.99% annual percentage rate (APR).

If you pay late, credit card issuers may be willing to waive the late fee and reverse the penalty interest as a courtesy if you call and request it. Here are a few points to touch on when you contact the card issuer:

• The situation: Explain your reason for paying late and the steps you’re taking to avoid future late payments.
• Your payment history: Reference your previous payment track record. If you have a solid record of paying on time, you may have a higher chance of getting late fees removed.
• Customer loyalty: Discuss how long you’ve been a customer and mention how factors like a high penalty APR could make it necessary for you to transfer your balance elsewhere. To retain your business, the card issuer may be willing to make some concessions.

Whether you’re able to get the fee and penalty APR removed can vary by situation. Out of the two late penalties, paying the higher APR over time could be the most costly if you maintain a balance on your credit card.

If the credit card issuer refuses to remove the higher APR, ask how long you’ll need to make on-time payments before interest can return to the standard rate. You could also ask to speak with a supervisor to see if they’re able to offer you a better resolution.

Automate Your Payments

Automating credit card payments is a way to avoid future late payments and fees. To set up autopay, you’ll need to connect a bank account to your credit card account and ensure that the bank account has sufficient funds to make payments each month.

Credit card issuers may offer many different autopay options. For example, you could set up autopay to pay the minimum due, the entire statement balance, or a fixed amount of your choosing each billing cycle. You might also be able to break payments into multiple installments for the month, which could be easier on your budget.

The Bottom Line

Keeping your balance low on a credit card and paying on time are two of the best ways to build and maintain strong credit, but life happens. If you overlook a due date, all the work you put into building credit won’t immediately be in vain.

Late card payments won’t show up on your credit report as long as you pay within 30 days of the due date. Your credit card issuer may also offer a one-time late fee waiver and could remove the penalty APR upon request. If not, you could transfer your balance to a new card with a lower interest rate. Experian’s card comparison tool can help match you with credit card offers that fit your credit profile, and those offers could include low-interest introductory deals for balance transfers.

At O1ne Mortgage, we are committed to helping you navigate your financial journey. If you have any questions or need assistance with your mortgage needs, don’t hesitate to call us at 213-732-3074. Our team of experts is here to provide you with the best service and support to ensure your financial well-being.