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Paying Late Can Really Cost You

Dec 18, 2007
Credit card companies across the board are beginning to impose higher fees for late payments. For some companies, higher late payment fees are just the beginning of what they can do to you when you drag your feet on paying them.

The amount of money that a credit card company will charge you as a late fee is pretty much up to the company. Some will charge less than others, but some will happily charge more. It is not uncommon to find some credit card companies demanding as much as $39 or so as a late payment fee.

What might surprise some consumers is how quickly some of the companies are issuing these late fees. For example, your payment is due on the 29th of the month and you make an online payment to the company at 1 AM on the 30th. In other words, one hour late. Well, don't be surprised if you get hit with a late payment charge.

Paying a late fee can be annoying but the credit card companies can do more if you are late on your payments. One of the most common tactics is to raise your interest rate on the card. Some consumers who have been late once or twice have found that their interest rates were increased to as much as thirty percent or higher, just for being late on those payments. No other financial issue has to come into play here. If you pay late, you may find yourself with a much higher interest rate on that particular card.

Depending on how late you are and the company that issues the card, you may also find that your tardiness is being reported to the credit agencies. This, of course, can alert issuers of other cards you may have that they, too, may need to increase your interest rate with them. In case you are wondering, yes, they can do this to you.

If you do find yourself with a higher interest rate because of paying late, you have a few options. Some of the credit card companies will reset your interest rate to its original level if you make on-time payments for a certain amount of time. This is usually six to twelve months without a late payment. Other companies may reduce the rate if you agree to sign up for an automatic payment system through your checking account.

Another option is to put that card away, pay off the balance, and move to another credit card company. Many consumers seem to like this one best. However, consumers should also understand that credit card companies are getting tighter on new accounts so it may not be as easy to get a new card as it once was. This can be especially true if you already have that late payment logged into your credit report.

The best advice of all is to simply pay on time. Even if it means making a short-term sacrifice on something else, get that payment into the mail so that it arrives on time and you can avoid all of these late pay problems.
About the Author
Peter Kenny is a writer for The Thrifty Scot, please visit us at Loans and Secured Loans
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