The Effects Of A Single Late Credit Card Payment

by David Bakke

I would like to recount for you my recent experience with a credit that I had that I failed to make a timely payment on. Normally, without fail, I pay my credit card balances in full and on time every single month. This is a very important piece to improving your credit score and credit rating. However, I was completely unaware of the wide-ranging bad effects of simply making one late payment on a credit card.

My Story

This is what happened. A few months back, I signed up for a new credit card—I can’t even remember which one it was. Well, in order to get some additional points for my cash back rewards account for this card, I signed up for paperless billing. This was a big mistake. For the most part, I don’t have very many accounts that send me my bills electronically. I fully realize that this is not the greatest thing in the world regarding the environment, but if I don’t get a paper bill in the mail each month for any of my accounts, then that bill pretty much doesn’t get paid. It’s just how I am wired, I guess.

So like, I said, I signed up for this card and signed up for paperless billing. I made about $500 worth of purchases on the card, and then never paid the bill. The account got to be about thirty days past due before I was finally made aware of my error. Of course, I immediately paid the balance off in full, but even then, I suffered some serious consequences as a result of my oversight.

The Effects

This is what happened as a result of this one late payment:

  • Spending Limit Reduction: My credit line for that card was immediately reduced from $5000 all the way down to $500.
  • Late Fees: I paid a $39 late fee for that card.
  • Interest Charges: I paid $42 in interest for the purchases made on that card.
  • Other Credit Cards: Believe or not, I had my spending limit reduced significantly on two other credit cards after they found out about that late payment. This one really shocked me. I guess credit card companies today monitor your credit report on an ongoing basis, and take such actions when they deem them necessary.
  • APR Increase: I can’t remember the exact percentage, but they bumped up the APR on that card to the highest ratethey could (no matter here, as I won’t use that card again, and even if I did, I‘d never carry a balance). But for those of you that carry balances, keep this in mind as well.
  • Overall Credit Score Hit: I am afraid to even check it, but I know that my credit score took a hit because of this one late payment.

Moral of the Story

So, the moral of the story is this: pay your credit cards on time! The effects of paying late are now much more expanded that you might think. Set up whatever system you can to ensure timely payments, and get those payments in on time!

Do you have any credit card horror stories that you’d like to share? Feel free to add your comments below.

{ 2 comments… read them below or add one }

1 jackson rodgers April 2, 2011 at 5:04 pm

Thanks for sharing your story. It resonates with a lot of people. If you are late on one credit card, all credit cards are impacted and your FICO score goes down. Another moral to the story is if you’re not use to paying on-line, choose snail mail.

2 jackson rodgers April 2, 2011 at 5:06 pm

Thanks for sharing your story. It resonates with a lot of people. If you are late on one credit card, all credit cards are impacted and your FICO score goes down. Another moral to the story is if you’re not use to paying on-line, choose snail mail.
*Excuse the double post, I had an error in the previous post. Thank you.

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