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While the thought of paying a credit card bill isn’t thrilling for anyone, it’s an unavoidable truth of being a cardholder. What’s also true is that being late on payments can cost you even more than you bargained for.
Missing a credit card payment can mean getting hit with late fees, penalty APRs and dings to your credit score. However, there are ways to get ahead of your bills and even recover from missed payments with little harm done.
How late payments can hurt your credit score
If your credit card payment is only late by a few days, it won’t hurt your credit score. However, if your credit card payment is more than 30 days late, your credit score could drop.
Why? Because once a payment is 30 days late, issuers report the late payment to the credit card bureaus. The credit bureaus add the late payment to your credit report, and companies like FICO use that information to lower your credit score. Since your credit card payment history makes up 35 percent of your credit score, it’s best to avoid late payments whenever possible.
How much late fees can cost you
The Consumer Protection Finance Bureau has set limits on how much credit card companies can charge in late fees. Currently, these limits are:
- $28 for the first late payment
- $39 for any subsequent late payments within the next six billing cycles
Keep in mind that the late fee can never be higher than the minimum payment due on the credit card. In other words, if your minimum payment is $25, your late fee can be no higher than $25.
Ways you can avoid late fees
Set up automatic payments
One of the easiest ways to ensure on-time credit card bill payments every month is by setting up automatic payments. This means that your credit card payment will be withdrawn from your bank account automatically every month. You can elect to pay the minimum amount, the amount on your statement balance or a fixed amount of your choice.
Keep in mind that this method still calls for some attention to detail. For instance, if you don’t have enough money in your account to cover the automatic withdrawal, you could rack up overdraft charges.
Set up calendar reminders
If you don’t like the idea of automatic payments, try setting up calendar reminders for yourself instead. You can schedule reminders as far or as close to your payment due date as you choose — even getting notifications sent directly to your email or phone. Scheduling your own payment reminders is a great way to keep things from sneaking up on you.
Change your payment date
If you’re having trouble making on-time credit card payments because they fall at an inconvenient time of the month (right before payday instead of right after, for example), try changing your credit card payment date. You can do this online, or you can call the number on the back of your credit card.
If you have multiple credit cards, determine whether it would be more helpful to make each payment due on the same date or on different dates.
Locate the late fee warnings in the fine print
If you want to know how much your credit card charges in late fees, check the fine print. Your credit card statement, whether you get it in the mail or retrieve it online, should have information about late fees. This information is usually on the first page of your statement, under the heading “Late Payment Warning.”
The fine print might also warn you that late payments will result in a penalty APR — meaning your credit card interest rate will go up. If you don’t pay off your credit card in full every month, having a penalty APR applied to your balance could end up costing you a lot of money. If you do get stuck with a penalty APR, it should return to your regular APR after six months of on-time payments.
How to appeal a late fee
If you accidentally miss a payment, your first step should be to make that payment as soon as possible. Your next step should be to call the issuer to see if you can get the late fee removed. Many people don’t realize that they can appeal a credit card late fee — especially if it’s their first late payment. Many issuers will waive late fees as a courtesy to customers with good payment records. Call your issuer, explain the situation and ask a customer service representative if they can waive the fee.
If you’re also subject to a penalty APR, you can ask for its removal as well. Then set a calendar reminder, sign up for automatic payments or change your payment dates to help prevent future accidental missed payments.
The bottom line
While it’s never advisable to form a habit of making late payments, accidental cases are not the end of the world. Be honest with yourself about any disorganization or lapses in memory when it comes to managing due dates, and take some practical steps to protect yourself moving forward.