Missing credit payments may not seem like a major concern, however, if you are in the business of making money, this is one incident that spells ka-ching! From balance transfers to late payment fees and everything in between; credit card companies generate millions of revenue every year from this kind of finance charges. And to our disadvantage, we rarely receive an immediate heads up from the billing authorities. Heck, it could even take a week before we hear from the credit card company about the delayed payment or worse it could be reported only on the next billing cycle. Surprise, surprise, you have an obligation to settle a fee amounting to $35 due to late payment.
Attached to delayed payments are penalty fees. But this is not the only scenario that may occur. It may be followed by an increase in your interest rate and a decrease in your credit score. Further damage may be done to your credit standing when the said delay reaches one of the three credit bureaus. In addition to this, the card holder may not be aware but he may be covered by the universal default clause. Under this provision, a perfectly fine loan goes into default when you incur a delay on another distinct obligation. An example is having two credit cards, Card X and Card Y. The first card, Card X, is subject to universal default. If you ever incur a late payment with Card Y, Card X will automatically be on default as well. And usually default is equated to an increase in interest rates.
Now you have to deal with two credit cards with interest rates shooting upward. One must realize that there are a lot of loopholes in the agreement that allows a financial institution to legally increase the interest due to late payment. Reading the fine print in the terms and conditions suddenly becomes a necessity, huh?
Though this late payment and interest boost can be questioned or appealed. If you incur delay knowing that you settled the debt before the due date, don't hesitate to contact your service provider and demand an explanation. This usually happens when payment was done through snail mail. It is advised that it be sent 10 days prior the due date to give ample time for delivery and processing.
However, this does not mean that an online payment is a ticket to no more delayed payment. Because like the terms and conditions, online payments also have guidelines that need to be followed to recognize any action performed. If it is posted that online payments are accepted only up to a specific time of the day like 6 in the evening, make certain that you settle everything before the clock strikes 6. Another issue is that you can still get smacked with a late fee even if you've configured a monthly payment scheme.
Let's assume that the minimum amount due is $80. You arranged that $100 be withdrawn from your checking account monthly. Unfortunately, you purchased one too many items the following month escalating the minimum to $135. Presto! Another late payment fee. To prevent this from happening, routine check and review must be made at least once a month to make sure that the minimum amount be settled.
On the bright side, the computation of the credit score doesn't treat each and every delayed payment as one and the same. An isolated incident of a 30 or even 60 day payment delay will prove its impact on your credit score in the months when it was incurred. But after a year or so, its effect will slowly diminish. But to default on quite a few payments for one or two billing cycle is a no-no.
Bottom line: Settle all your debts on time to avoid any hassle or any unwanted charges.
ไม่มีความคิดเห็น:
แสดงความคิดเห็น