Managing your credit cards, especially when you are inexperienced or dealing with tough financial issues, can be difficult. Juggling all of the minimum payments while knowing that interest is costing you thousands of dollars of years is painful.

Having a late payment will only make things worse. The financial consequences of late payments are very serious for you and your credit score. You should try to do everything in your power to avoid late payments to your credit cards.

If you’ve tried everything you can to avoid these credit card problems and it seems inevitable, here is what you can expect to happen.

The Impact of a Late Credit Card Payment

If you are able to pay your credit card bill, just not by the due date, here are some of the consequences you will likely face.

Late Payment Fee

The Credit CARD Act of 2009 brought a lot of positive change for consumers in the banking industry. One of those changes involves a late fee. In the past you would be charged about $39 on average for your late fee. Additionally, if the fee caused you to go over your credit limit due to your credit card being maxed out you would also be charged an over the limit fee.

Thanks to the Credit CARD Act you will now pay just $25 for your first late fee. You can still be charged additional fees for going over your credit limit, but only by the amount that you went over the limit. (So if you go over by $10, the fee can only be $10.)

You can be charged a higher $35 late fee if you have a second late payment within six months.

Higher Interest Rate

The next thing that happens is the credit card company will likely raise your interest rate. This used to be absolutely devastating because in the past they could raise the rate on your current balance. Meaning if you had a 9.99% rate on $10,000 and had a late payment your interest rate for the whole balance could shoot up to 22%. This often resulted in a downward, unrecoverable spiral of payments ending with bankruptcy.

The Credit CARD Act changed this, too. Now the company can raise your interest rate but only on new purchases moving forward. So your current balance will remain at the same rate, but if you keep (unwisely) using your credit card then those purchases will be at the higher interest rate.

Credit Score Damage

Lastly, a late payment will result in the credit card company informing the credit bureaus to put a late payment mark on your credit history. This shows future potential lenders you have had trouble paying your bills on time in the past and can have a devastating effect on your ability to acquire credit in the future.

Thankfully most credit card companies don’t alert the bureaus the instant you are late on a payment, so you have time to react — more on that in a moment — but if it goes too long you will end up with a mark on your credit report.

How to Repair Damage From Late Credit Card Payments

Having a late payment can end up with all kinds of fees and higher interest rates for you. The mark on your credit report is especially bad for future credit consideration.

Thankfully, if you know you are going to have a late payment you can try some things to either completely avoid some of the consequences or at least dampen the damage a bit.

Call Your Credit Card Company

First, you must call your credit card company. The best time to call is as soon as you know you are going to be late on the payment. Don’t wait until you’ve been late 3 days. It is best to call before your payment due date to work with the credit card company.

In this case it is better to ask for permission than for forgiveness on the back end. If you wait until the end you are facing a more difficult uphill battle to reverse the damage caused by the late payment. If you talk to them upfront before the damage is done you have a better chance for a positive outcome.

Once you’ve got them on the phone, what should you ask for? Here are some items:

  1. Inform the customer service representative that you know you have a payment of X dollars due on Y due date.
  2. Let them know you are likely going to be late on that payment.
  3. Let them know which date after your due date you will be able to make the payment.
  4. Ask for the late fee to be waived since you have been such a great customer.
  5. Ask if there will be any impact to your credit score. Remind them again about being a great customer.
  6. Ask if there will be any interest rate changes to your account. Once again remind them about being a great customer.

It’s pretty simple.

Going into the call you need to have a plan and have your facts straight. You can’t simple say, “Hey, I’m going to be late, is that cool?”

That won’t work.

Know how much your payment is, when it is due, and the critical piece: when you know you will be able to make the payment. Sometimes they may even just move your due date to that new date but then it is absolutely imperative that you pay on time for that new due date.

Having your facts together shows the representative that you are a responsible human being that has their act together. If you have a long and successful history of on time payments and no late fees with the company you can use that as leverage in the conversation. They’ve made a ton of money off of you and you could just simply take your business elsewhere.

If you can’t pay due to your income disappearing or being drastically lower, try not to mention that. The customer service rep may slash your credit line which would further damage your credit score. Stick to talking about when you will be able to make the payment, and ask for forgiveness up front.

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