In our recent blog Avoid 5 Financial Bad Habits: New Year Resolution for 2019 we pointed out the habits generally people has about money management. What these small habits costs to us financially. Also, in our next blog we will discuss what will happen if these small habits avoided and how can you effectively come out of this Habit of Late Payment.
Let’s discuss first What are the consequences of missing a payment;
- You may be charged a late fee.
You could be on the hook for a late payment fee that can often range from min Rs. 20 to Rs. 500 approx.
For credit card the late payment charges varies per type of card& the outstanding amount on card. It ranges from min. Rs. 500 to some percentage of outstanding amount.
Also, it applies with an interest of 2.5% to 4% which is annually 30% to 48%. Far greater than your personal loan interest rate.
Look at the below column which explains how much it cost if you regularly miss the on-timebill payments.
If you pay bills always after due date you miss the fortune. You pay almost Rs. 7500 yearly. This amount can be well invested in SIP which will help to achieve your kid’s higher education, marriage or any financial goal eventually.
- Your interest rate may go up.
Your credit card issuer may increase your interest rate because of your late payments. This could mean that a promotional interest rate may be forfeited and set to the default interest rate, or your interest rate may be set to a penalty interest rate.
- Your late payment could show up on your credit report.
If your payment is late, in particular if it’s more than 30 days late, your late payment may show up on your credit report and the three major credit bureaus may be notified. Not only that, but it could stay on your credit report for seven years.
- Your credit score may drop.
Your payment history typically accounts for a large percentage of your credit score, so a missed payment on your report could potentially have a dramatic effect on your credit score, depending on how late your payment is, how often you have late payments, and other factors. “Your credit score could take a major hit — anywhere from 50 to 100 points depending on your current score.”
Making a late payment is more than just annoying — it could also seriously affect your credit score. In order to avoid late payments, consider using these steps to ensure you make all of your payments on time.
And if you do miss a payment, call your credit card issuer immediately and take steps to try to ensure you don’t do it again.
Now we know how this small yet dangerous habit can cause us financial loss as well as credit loss stay tuned for Aarya Consulting upcoming blog and you will easily manage to come out of this habit with simple steps you can follow in your day today life. Have a transformational Year 2019 ahead !!!