Well, for the record, credit card payments made untimely aren't that scary.
Truly!
With that being said, you have probably understood that credit card bills and debts paid untimely are not going to screw your life up.
And this blog is not for threatening you with that.
But not paying your credit card bills on time can cause problems, and you can have a bit of an unpleasant time solving them.
That's why missing your credit card payments is a thing you might not want.
Credit card transactions are made for special causes. They give you the freedom of carrying just a plastic card and keep your material money safe.
They are flexible and do not even require much space to be carried.
With a credit card, you also get facilities and offers, which actually turn out to be financially beneficial for many of you.
But everything good and advantageous comes with a price.
Your credit card is actually a simple thing you can manage. If you stick to making the payments in time and be careful about interest rates, then you can surely make a statement out of your credit card and put it to good use.
However, late payments are not appalling. But they are a bit troublesome.
Why?
Late Credit Card Payments May Affect Your Credit Usage
In most cases, credit card payments are the payments people love to make. But they end up not managing it. They lose tracking the money and overspend.
Or they wait too long to pay a certain bill.
And the credit score goes down, for which they again need to look for personal loans for bad credit from Ireland lenders in order to solve the issue.
But, it is true that most of these credit card payments are often not tracked and, therefore, mismanaged by credit cardholders.
If that is not what you believe, then look at what Chris Dlugozima, learning experience designer at GreenPath Financial Wellness, has to say about credit cards:
"You're not going to be nearly as likely to stay on top of what's happening,"
And that means it is possible that you will not be able to track money in the way you want to because of the chores you do and the immense pressure you deal with from work every single day.
But that doesn't mean there are solutions!
If you read the following points on what happens when you miss credit card payments and how you can solve that, you will never be stuck in the muck in such issues.
- Interest Rates Will Get Higher (Silently)
- Credit Score Can Get Low Anytime
- Credit Limit Might Get Low as Well
- You Can Lose Rewards and Discounts
- Late Fees and Penalties?
Well, no matter what you know about this, it is true that credit cards are the best financial tools that are to be managed wisely.
Probably these points just mentioned will help you do that.
Keep reading them on.
Interest Rates Will Get Higher (Silently)
You need to understand the interest rates of credit cards thoroughly.
Not clearing the monthly credit payment or debts; or making untimely payments can SERIOUSLY increase your interest rate.
Now, the point of saying this is that your interest rate is not going to be charged just by the outstanding amount of your credit card.
You may have to pay interest in purchasing things using your credit cards.
And you are also required to pay a high-interest rate in case you withdraw money.
So, you see the problem.
Now, there is something more.
Not paying the outstanding amount but the minimum amount will also require you to pay interest.
In this case, interest rates can reach up to 40% for annualized calculations.
So, pay your credit card bills in time and save yourself from surging annual interest rates.
Credit Score Can Get Low Anytime
According to experts and FICO; credit card scores in the UK are determined bad or good based on the following statistics:
- 700 and above: excellent or very high credit score
- 600 to 700: good or high credit score
- 590 and below: bad or low credit score
A survey conducted by Experian revealed that not knowing how the credit score works can have a ‘very real impact’ on credit card transactions such as interest rates or loans.
For example, you might take a small loan in Ireland, and you know that these personal loans come with significantly lower interest rates.
But your credit score is messed up.
You might need to pay your lender extra interest rates.
When the credit score gets low, it creates a bar in your credit card usage.
You get limited discount rates and rewards.
Some of the credit card cashback offers can be used, but the overall efficiency is limited since you already are paying extra interest rates and fees (on which we shall definitely discuss a little bit later).
Credit Limit Might Get Low as Well
When credit card companies issue a card for you, they set a credit limit. These credit limits are basically amounts beyond which you cannot pay using your credit card in a month.
Now, the more the credit limit you have, the better freedom you get while making purchases.
But, untimely credit card payments can also have some negative effects on your credit limit, and that can make your freedom be reduced a bit.
You can still ensure you have got a fair credit limit by making payments at the right time.
You Might Miss Interest-Free Credit Period
Now, let's suppose you have got a credit card that comes with attractive offers.
You can get credit cards nowadays with cashback offers.
You can get a credit card that comes with 0% annual interest rates.
Or you can get a credit card that allows you to use it for some time without paying a single pence on the interest.
These periods can be less than a month, such as 25 days, or they can extend up to a month and a half.
When you are making late payments or untimely payments, you are not going to be awarded the interest-free period.
It is because the bank funds your interest in this period.
If that finds your credit card usage is going the wrong way, then it has the right to cease the period.
You Can Lose Rewards and Discounts
Well, many credit card companies offer you privileges you love to use.
Just a few moments ago, you have known about cashback credit cards.
These credit cards don't even cost much.
With these credit cards, you get a percentage (up to 5% if you're lucky) returned to your account while you buy something.
Then comes the credit cards that are packed with benefits such as discounts and rewards.
For example, you go to a restaurant with your spouse after a long week and find that the restaurant offers special discounts or extra meals when you are using credit card payments.
Although you have cash in your wallet, this offer is a tempting one (like the food).
Now, once you have messed your credit card payments, almost all of these facilities will not reach you.
It is because most such issues will create problems in the credit score. Low credit scores can be seriously affected in these scenarios.
You can fix it with the help of a personal loan in Ireland for bad credit, as these loans take care of the debts you have or the late payments you are suffering from using your credit cards.
When that is done, your credit score gets naturally high.
The payback that loan in time, and you will get a higher credit score.
Isn't that a smart solution?
Late Fees and Penalties?
Some credit card providers (actually most of them) will not offer you much of a relaxation when you are using your credit cards with due payments.
Many organizations impose strict laws using credit cards, and you might need to make sure you are not missing payments and making them timely.
Sometimes, you will be asked to pay a sum of money as a penalty.
Plus, there is something called the late fee.
A late fee is an extra charge that your bank or credit card provider may add to the upcoming credit card bill.
Your expenses keep on rising.
To Conclude
Well, it is better to be on the safe side rather than be stuck in clutters of credit card debts.
Again, it must be stated that most of these debts aren't very serious that you cannot manage.
But, yes, you might need a proper setup to do that and a healthy financial plan (or plans) to secure those debts/payments and repay them back.
If needed, take out a bad credit loan as that can solve the problem immediately. In other cases, you can surely go ahead and talk to a Finance Advisor, who will make you get the best solutions for your credit card late payments and a probable bad credit score.
