Consequences of Credit Card Late Bill Payment

Last Updated : Sept. 27, 2019, 6:45 p.m.

Many of you will surely agree on the fact that credit cards among their numerous benefits provide the convenience of spending on credit. However, this means that whenever you don’t have cash at any particular time, with the help of credit card you can purchase on credit, and can easily pay the borrowed amount later to the bank.

More to the point, one thing that needs to be mentioned here is the fact that with credit card comes great responsibility of paying the due amount before due date. If you are not regular with your payments of credit card dues, you need to face lot of consequences that can affect your financial plans and management.

Let’s take a look below to the following consequences:

Paying Late Fee on Credit Card Bill

If you do your credit card payment after the due date or you have paid less than the minimum amount due on your latest credit bill, there is no doubt on the fact that the bank will apply late fee charge on your default payment that will get generated in the next bill. However, even if you combine the payments of two months together, then also the late fee charge will applicable on you.

Rise in Rate of Interest

When you already made the default payment on your credit card, and are making purchases via card only, instead of that the rate of interest on services such as your EMIs on credit card or cash withdrawals might be increased. In fact the rate of interest charged on your regular purchases might be hiked.

Loss of Credit Limit

Well it is one of the most common consequences wherein the excessive defaults in your credit card payment can actually lead towards the reduction of your credit card limit, which ultimately affects your future spending power.

Unavailability of Interest Free Credit Period

Moreover, for new credit card owners many leading banks usually provide an interest free credit period of nearly around 55 days wherein the card holder needs to pay the complete bill.

For example-If your first statement for the billing period of 1 ^st to 30 ^th April is generated on 1 ^st june with the due date of 25 june, once you paid the full payment before this due date then no interest will be charged on you. However, the interest free period is generally for 10 days which lies between the due date of current bill payment and the generation of next month’s bill date.

Thus, if somehow you missed the timely payments on your credit card, the privilege of interest free credit period can be withdrawn or permanently discontinued from your credit card.

If Your Credit Score Gets Affected

Furthermore, the defaults that you knowingly or unknowing make on your credit card is regularly updated by the banks to your CIBIL , and that can ultimately harm your credit score. If your credit score somehow gets affected, it would not be wrong to say all your existing as well as future applications regarding any sort of loan or credit card might be rejected.

Specially when it comes to applying for loans, a bad credit score can actually create a negative impact on your loan application which might result in higher rate of interest than the normal market rates.

Dealing with Loan Recovery Agents

In case you fail to make the payment of our credit card dues which is due for around 90 days, the bank will forward your case to their in-house recovery division or the third party recovery agencies. These agencies will constantly be in touch with you so as to recover their credit card due payment.

However, even though the Reserve Bank of India has now come up with strict customer-centric guidelines, but still it is a big problem or hassled task when it comes to dealing with these recovery agencies or agents.

Being Committed is the Right Approach

Furthermore, the combination of all these consequences can tremendously affect your financial needs, credit score, and which ultimately impact your spending power. And, it needs lot of time to recover from these adverse affects. Thus, it would be advisable to you to make the smart or sensible move by paying your credit card dues all the time.

However, due to some major issue or unfavourable situations, you missed your payments on time, in such case you need to get in touch with the bank first. You should talk to them and tell what problem your are going through so that your bank can reschedule your due payment, and set one date on which you can do the payment. Not only this, depending on your history or relationship, the bank can also allow you to pay all your total dues in installment so that paying the total dues can be easy on your pocket.