Credit Card Payment

It happens to the best of us - life gets busy or you just can’t make ends meet and you miss a credit card payment or two. The effects of missing even one payment can be detrimental to your personal finances and your credit score, though.

Fortunately, there are ways to fix the issue, but first you must figure out why you missed your payments.

Reasons you may Have Missed your Credit Card Payment

Most people have missed at least one credit card payment in their lifetime for different reasons, but here are the most common reasons.

You Forgot the Due Date

Sometimes we just forget when a bill is due. If that’s the case, set up your payments on automatic payment or set up a calendar that alerts you when your payments are due. The minute you realize you missed a payment, make it.

The interest will still have accrued from the date you missed and you’ll pay a late fee, but you’ll avoid any damage to your credit score.

You Didn’t Have the Funds

If you didn’t have enough money to cover your payment, figure out why. Most credit card companies allow you to move the due date at least once a month. Figure out when you have more room in your budget to make the payment on time and request a due date change.

You Can’t Make Ends Meet

If you can’t make ends meet, then you might have more of an issue that changing the due date won’t help. If that’s the case, it’s time to go back to the drawing board and figure out how you can start from scratch. Sometimes it takes the help of a credit counsellor to help you figure out the best plan to get out of debt, like a consumer proposal or debt settlement program.

Consequences Credit Card Payment

Missing a credit card payment can hit you hard financially and on your credit. Consider these factors before you miss a credit card payment again.

Damage to your Credit Score

If you miss your credit card payment by a few days it won’t hurt your credit, but if it gets to 30 days or more, your credit score suffers. Every 30 days you miss your credit card payment causes your credit score to fall.

Your credit payment history is the largest part of your credit score, so even one 30-day late payment can be detrimental to your credit score.

Interest Charges

You pay interest as soon as you carry a balance beyond the initial grace period. Let’s say you charged $200 and only made the minimum payment by the due date. You’d pay interest on the remaining balance until you pay it off in full.

If you miss a payment, you miss the opportunity to pay your principal balance down and lower your interest charges. The interest charges are added to your principal balance which then means you’re paying interest on an even higher balance, making it harder to get out of debt.

Late Fees

Credit card companies charge a late fee the minute you miss a payment. For example, if your payment was due on November 1 and you paid it on November 2, you’d pay a late fee. The late fee varies by credit card but can be as much as $40. That adds $40 to your purchase and if you don’t pay it in full, it will increase with the interest charges it accrues.

Potential for a Lower Credit Line or Closed Credit Card

If you miss your credit card payments too often, yoru credit card company may decide that you aren’t a good risk. They could either lower your credit line or close your credit card altogether. They give you a credit line based on your ability to repay what you borrow. If you can’t do that, they will take back their offer to reduce their risk of a loss.

Higher Interest Rate

If a credit card company doesn’t take away your credit line, they may increase your interest rate, especially if you’re on a promotional rate. Teaser rates are for borrowers with a good payment history. Read the fine print on your agreement. Usually if you miss one payment, they default to the higher interest rate right away.

Steps to Take if you Missed a Credit Card Payment

If you missed a credit card payment, take these steps immediately.

 1.   Contact the credit card company

Don’t ignore your missed payment. Call the credit card company right away and tell them why you missed the payment. If you can’t make it right now, they may be able to work out a plan with you.

2.  Revisit your budget

If you couldn’t make your payment for any reason other than you forgot, revisit your budget and decide what you can change so you can make your payments. You may have to cut back on other expenses or see about consolidating certain debts.

3.   Work with a professional

If you can't figure out how to fix the situation. Work with a certified credit counsellor to see what options you have. Don’t wait until you are in over your head in debt, get help right away. The sooner you get help, the easier it is to find a debt solution that works to fit your budget.

Final Thoughts

Missing a credit card payment isn’t good, but it’s not the end of the world if you fix it right away. If you can’t fix it by making the payment immediately, talk to your credit card company or a credit counsellor right away about your options.

At EmpireOne Credit, our certified credit counsellors can help you figure out your best course of action. Our professionals will walk you through all of your options, helping you understand the pros and cons and how each option could affect your personal finances moving forward.