You might not realize it but missed payments are more serious issues than what you think. While your credit card issuer won’t come knocking at your door if you have late payments, you can expect them to take action behind the scenes.

The way your issuer responds to your late payments could continue affecting you not only for months but even years into the near future. This is why it is important to know the possible consequences of late payments so you can make the effort to pay right on time.

Consequences of Late Payments

Your card payment will already be considered late if this is received after the due date’s cutoff time or if this is lower than the due minimum amount. Here are some of the things that can happen if you make late payments:

• You will be charged a late fee by your creditor.

A fee for your missed or late payment will be included in your next billing statement. These late fees could go as high as $40 that depends on the late fee policy of your credit card and if it is the very first time that you were late for the past 6 months. You will be charged a late fee every month you have late payment or you pay lower than the minimum.

• It will increase your interest rate.

If a payment is already past its due date for 60 days, expect that you will be getting a higher interest rate. Creditors will not only add a late fee as your penalty because it is also common for them to increase the interest rate to penalty rate, which is your credit card’s highest interest rate.

This higher rate of interest can increase your finance charges that can make it pricier to carry the balance and extend the length of time that it will take for you to have your balance paid off.

Your credit card issuer will be required to return your pre-penalty rate just for your past balance if you make your payments on time for a period of 6 months.

Based on the specific terms of your credit card, purchases that you make after the implementation of the penalty rate might still get the higher rate. Also, you might end up losing the promotional interest rate that you got when you signed up for your credit card. A delinquent card might also prevent you from cashing in your rewards.

There are credit card issuers that don’t apply this penalty rate. Make sure you check the terms of your credit card to see the list of all the fees associated with your card.

• Your credit report will include the late payment.

This is the case for payments that are late for over 30 days. An entry will be added to your report and stay there for up to 7 years. If the next payment is still missed, the entry will be updated to 60 days that continues in increments of 30 days until charging off your account after 180 days.