The Harsh Consequences of One Late Payment

This post comes from partner site LowCards.com

Life gets busy. Every so often, a bill can get overlooked or paid late. It can happen regardless of your credit score or income level.

But if you miss a credit card payment, there can be a big price to pay. It does not matter what your credit history is or how long you have made on-time payments. If you miss making one minimum payment by the due date, you will likely get a notice that your issuer will charge a higher interest rate on future purchases. This can be accompanied by a late fee and lost reward points. A missed payment is an expensive mistake.

Here are some possible consequences from missing one minimum payment:

  • Late payment fee. The fee can range from $15 to $35 and will be added to your balance.
  • Interest charges. You will have to pay interest on your balance. This is quite a shock if you always pay your balance in full. The amount of interest will depend on the APR for your card.
  • Higher interest rates. If you have a late payment, you will be subject to a rate increase, but the extent of the increase can be confusing.

If you are late with your minimum payment, your issuer can raise your interest rate on new purchases. Your issuer has to provide 45 days’ notice of the increase and the conditions, and provide the start date for the increase. The issuer can increase the APR on your new purchases as high as the penalty APR; this ranges from 27 to 29.99 percent with most issuers. The new interest rate will apply for at least six billing periods. If you make all of these six payments on time, the CARD Act requires your issuer to review your account, and if appropriate, give you a reduction in your interest rate.

If your payment is more than 60 days past due, your issuer can give a 45-day notice and increase the interest rate on your existing balance. Again, if your make at least the minimum payments on time for the next six months, the issuer has to review your account and, if appropriate, lower your interest rate.

  • Lower credit score. Your issuer can report your missed payment to your credit reporting agencies, and this can pull down your credit score. Payment history accounts for an estimated 35 percent of your credit score. If this missed payment was a one-time mistake in a good credit history, then your credit score should rebound.
  • Forfeited points. If you did not pay the minimum due by the closing of the next billing period, rewards, points, or miles earned for that billing period might be forfeited. Capital One cardholders will lose any rewards applied to a balance during the billing cycle containing a late fee. Some issuers charge a fee to reinstate the rewards. American Express charges $29 for each month of reinstated points or miles, once you have paid the minimum due.

“Make sure the points are worth the fee,” says Bill Hardekopf, CEO of LowCards.com and author of The Credit Card Guidebook. “A $29 fee may be much more than your points are worth, so you may be throwing money away. Points are worth about a penny for most reward programs.”

Avoiding the Pain of Missed Payments

  • Call your issuer and ask them to waive the late fee. Tell them you have been a good customer and just made a mistake. There is a chance they will revoke the fee if you have a good payment history.
  • Set up automatic payments so you will never miss a payment or forget to pay your credit card bill.
  • Sign up to receive payment alerts via email. These can serve as great reminders that your payment is due in a week.
  • Pay on time. Issuers are now required to review your account six months after instituting a rate increase. If you have paid on time for the subsequent six months, your APR could be restored to the original rate.
  • Ask for your rewards to be reinstated. Your issuer may not waive the reinstatement fee, but it doesn’t hurt to ask. If they don’t, you have to decide if the rewards are worth the fee.
  • Create a certain location in your household where all bills are stored so they don’t end up in your purse or your briefcase. Set up a specific day to pay them every week.

Disclosure: The information you read here is always objective. However, we sometimes receive compensation when you click links within our stories.

Read Next
7 Reasons Workers Age 65 and Older Have Not Retired Yet
7 Reasons Workers Age 65 and Older Have Not Retired Yet

For some, the golden years are a time to increase the gold — but their reasons for delaying retirement vary widely.

These 12 Reusable Products Save You Money Over and Over
These 12 Reusable Products Save You Money Over and Over

Buy reusable versions of these household items, and you won’t have to spend another dime on them for years.

The 5 Worst Home Upgrades for the Money
The 5 Worst Home Upgrades for the Money

These home improvement projects basically never pay off.

7 Tips for Building an Emergency Food Supply
7 Tips for Building an Emergency Food Supply

A pandemic or natural disaster could leave you reliant on your existing emergency food supply. Is your pantry well-prepared for emergencies? Knowing what to stock up on for emergencies can be a difficult task and we’re here to help.

This Pastime Can Keep Your Brain Sharp as You Age
This Pastime Can Keep Your Brain Sharp as You Age

It’s never too late to benefit from taking up this type of activity.

View this page without ads

Help us produce more money-saving articles and videos by subscribing to a membership.

Get Started

Most Popular
7 Kirkland Signature Items to Avoid at Costco
7 Kirkland Signature Items to Avoid at Costco

Even if it seems you save a bundle buying Costco’s Kirkland Signature brand products, they may not be the bargain they appear to be.

How to Buy Gas At Costco Without a Membership
How to Buy Gas At Costco Without a Membership

The warehouse club often has some of the cheapest gas in town. Here’s how you can get it as a nonmember.

10 Things to Stop Buying If You Want a Clutter-Free Home
10 Things to Stop Buying If You Want a Clutter-Free Home

If you like to keep things simple, avoid these purchases.

If You Find This Thrift Shopping, Buy It
If You Find This Thrift Shopping, Buy It

Vacuums from this brand can last a half-century, if not longer — and they’re hot on the resale market.

A Simple Way to Silence Robocalls Today
A Simple Way to Silence Robocalls Today

A few steps can keep your phone from ringing when a spammer calls.

This Company Makes the Best Tires in America
This Company Makes the Best Tires in America

Driver satisfaction with tires is at an all-time high, but one brand stands out.

This Health Issue Can Hint at Dementia Years in Advance
This Health Issue Can Hint at Dementia Years in Advance

One type of pain is especially associated with cognitive decline.

Can I Switch to Spousal Social Security Benefits When My Ex Dies?
Can I Switch to Spousal Social Security Benefits When My Ex Dies?

Knowing when to claim can help you maximize benefits.

If You Find This Thrift Shopping, Buy It
If You Find This Thrift Shopping, Buy It

This iconic dinnerware is prized for everyday use as well as reselling for profit.

Medicare Will Not Cover These 6 Medical Costs
Medicare Will Not Cover These 6 Medical Costs

Don’t let these health care expenses catch you off guard in retirement.

8 Things You Should Always Buy on Amazon
8 Things You Should Always Buy on Amazon

The giant retailer shines when it comes to these things, from basics to hard-to-find specialty goods.

Beware This Hidden Ingredient in Rotisserie Chicken
Beware This Hidden Ingredient in Rotisserie Chicken

Something foul may lurk in those delicious, ready-to-eat birds.

5 Ways to Get Amazon Prime for Free
5 Ways to Get Amazon Prime for Free

Hesitant to drop $119 a year on an Amazon Prime membership? Here’s how to get it for free.

5 Ways to Fill Your Pantry With Free Food
5 Ways to Fill Your Pantry With Free Food

Anyone can take advantage of these resources.

5 States With the Worst Health Care for Retirees
5 States With the Worst Health Care for Retirees

All of these states are located in the same region of the nation.

3 Ways to Get Microsoft Office for Free
3 Ways to Get Microsoft Office for Free

With a little ingenuity, you can cut Office costs to zero.

12 Deep Discounts Available on Amazon This Friday
12 Deep Discounts Available on Amazon This Friday

These items are steeply discounted — but the deals won’t last long.

6 Reasons You Should Stop Hiding Cash at Home
6 Reasons You Should Stop Hiding Cash at Home

Stashing money around the house is anything but harmless.

7 Big Purchases You Should Never Make
7 Big Purchases You Should Never Make

Sometimes a big-ticket purchase is nothing more than a big waste of money.

View More Articles

View this page without ads

Help us produce more money-saving articles and videos by subscribing to a membership.

Get Started

Add a Comment

Our Policy: We welcome relevant and respectful comments in order to foster healthy and informative discussions. All other comments may be removed. Comments with links are automatically held for moderation.