What are the Repercussions of a Late Payment on Your Credit Card?

What are the consequences if you are in a bind and can’t pay your credit card bill on time? We look at the fees you will incur and how it affects your credit score in the long run.

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Generally, you need to make a minimum payment on your balance of your credit card every month at the end of your billing cycle. To avoid paying interest, it is highly recommended that you make these payments on time, pay the full balance if possible. What happens if you miss a monthly payment or are late in making the payment?

A Missed Or Late Payment Can Affect Your Financial Status In Three Different Ways:

  • You may have to pay late payment fees
  • Your card’s interest rate may increase to the penalty rate
  • Banks can add your late payment to your credit history and negatively affect your credit score

Here is an overview of the financial consequences of each of these outcomes and what you need to do if and when they occur.

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Fees For Late Payment

A late payment fee is specified in most credit card agreements that take effect once you are late in paying your credit card bill. The late fee may depend on your balance. For the cards that we have reviewed like Citi Cashback Card and UOB One Card, this fee ranges generally from S$60 to S$100. If your monthly balance is less than a few hundred dollars, this fee can be a significant percentage of that amount. The late payment fee for a single month can be as high as the interest of your balance for an entire year. Of the three potential ramifications of late payment, the penalty fee is the least severe..

What Can You Do If You Miss A Payment On Your Credit Card?

If you have missed a payment on your credit card for the first time, you may want to consider contacting the company and request them to waive the late payment fee. There’s no guarantee that this method will work but some credit card companies are flexible and will waive the late fee for customers with good records. It is possible that they will help you get rid of this extra charge.

Related: How to Reduce Your Singapore Credit Card Fees to Effectively Zero

How Late Payments Affects Your Credit Report and Credit Score

Although you will be charged the late fee only once and the penalty APR will typically only apply to your credit card alone, if you are more than 30 days late in your payment, it will be reported to the credit bureau and affect your credit card report. This is important because your payment history contributes to significant portion of your credit score, and late payments can decrease your credit score. The impact will depend on various factors including the frequency of your missed payments and your previous credit score.

A low credit score will decrease your chances of getting a credit card, loan or mortgage. If you do get an approval, the lower credit score might cause you to pay higher interest rates. Late payments are recorded in your credit report in a classified manner based on the duration of the delays- the longer the delay, the greater the consequences.

Related: Why Your Credit Health Matters And How It Affects You At Different Life Stages

If you think you can handle the responsbility of a credit card and want to learn more about the different offerings, check out our results page of the best credit cards in Singapore.

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