Pay Credit Bill on Time & Avoid Risks
Did you forget your credit card or personal loan payment deadline? Be very careful, because this can lead to debt, stress and serious damage to your personal finances.
Here are some of the consequences of making a late payment and some tips to prevent it from happening again:
1) Charges and more charges
Right off the bat, the bank will automatically charge you at least one extra fee for not paying on time, no matter what your excuses are.
Some institutions present it as a late payment fee, which you are obliged to pay because it is in your contract. Keep in mind that some banks charge two or more additional fees for late payments.
2) Interest on interest
If you think that the interest rates charged by banks for accessing credit are expensive and abusive, then remember that a late payment will mean that you will have to pay even more interest, which is called moratorium interest, it is 50% higher than the ordinary interest rate of your credit and is charged when you are not punctual with your bills.
Unlike late payment fees, which stop being activated if you pay on time in the following months, late payment interest will have to be paid along with ordinary interest, which will undoubtedly affect your finances for more than one month.
3) Credit history is affected
You had to pay on the 13th, but it is already the 14th and you did not do it. That day of delay is already a wake-up call for the credit bureaus. So undoubtedly, the following month your score will be a little lower and the financial institutions will see that late payment even when you have already paid off that loan.
Remember that a blemish in your credit history may cause banks or financial institutions to reject your loan or credit applications in the future.
Tips to avoid falling behind on your payments again
1) Learn to differentiate between the cut-off date and the payment date
The payment date is the deadline for settling your debt with the bank. The cut-off date is the date established on which the account is closed with the expenses incurred in a month and is established 20 days before the payment date. Many times people confuse both dates and end up paying fees that they should not.
2) Organize your budget
Every month or every year write down the expenses you have to make and allocate the money for them, prioritizing the payment of services and credit commitments, which are dated and can be contemplated beforehand.
3) Use apps, agendas and calendars
There are mobile and desktop applications that remind you of the deadlines on which you have to pay your various basic and financial services. In addition, your mobile banking allows you to set up direct debit payments and remind you, through notifications, when you have to pay your bills.
4) Consolidate debts
If you have many payments and it is difficult for you to remember the different deadlines, then consolidate all your debts, so that it is easier for you to meet your financial commitments, in a single payment and with less interest.
I am Nikesh Mehta, owner and writer of this site.
I’m an analytics and digital marketing professional and also love writing on finance and technology industry during my spare time. I’ve done online course in Financial Markets and Investment Strategy from Indian School of Business. I can be reached at [email protected] or LinkedIn profile.