If you’re thinking about skipping a monthly credit card payment, you may be wondering what will happen. Here’s what you need to know.
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If you’re like most people, you probably have at least one credit card. And if you’re like most people, you probably worry about what will happen if you miss a monthly payment.
default on your credit card debt, it could damage your credit score and make it harder to get a loan in the future. In extreme cases, you might even be sued by your credit card company.
So what exactly happens if you miss a monthly credit card payment? We’ve put together a guide to help you understand the consequences of missed payments and what you can do to avoid them.
The Consequences of Missing a Monthly Payment
Missing a monthly credit card payment can have a number of consequences.Your credit score may drop, you may be charged a late fee, and your interest rate may increase. Missing a payment can also lead to a loss of rewards points and could make it more difficult to qualify for a loan in the future.
If you are late making a payment, you will be charged a late fee. The amount of the fee will depend on your card issuer, but it is typically between $25 and $35. You may also be charged a higher interest rate on future purchases and balance transfers. In addition, your late payment will be reported to the credit reporting agencies, which could damage your credit score.
Increased Interest Rates
If you miss a monthly payment on your credit card, you can expect your interest rates to go up. This is because creditors view missed payments as a sign of financial instability, and they want to protect themselves in case you default on your debt. The increased interest rate will apply to both your existing balance and any new purchases you make with your card. In addition, your missed payment will likely be reported to the credit bureaus, which can damage your credit score.
Damaged Credit Score
Your credit score will take a hit if you make a late payment, which could lead to higher interest rates and make it difficult to qualify for new lines of credit. The impact of a late payment on your credit score will depend on how late it is — 30 days, 60 days, 90 days, or more. The sooner you make the payment, the less damage it will cause.
How to Avoid Missing a Monthly Payment
According to CreditCards.com, 43 percent of Americans sometimes carry a credit card balance, and 18 percent always do. If you’re among the people who occasionally carry a balance, you know that credit card companies typically charge interest on that balance. Depending on your card’s interest rate and how much you carry over each month, those monthly interest charges can really add up.
Set Up Auto-Pay
One of the best ways to avoid missing a monthly payment is to set up auto-pay. This way, your payment will be automatically deducted from your bank account on the date that it is due. You can typically set up auto-pay by logging into your online account and going to the payments section.
Another way to avoid missing a monthly payment is to make a budget and stick to it. This way, you will know exactly how much money you have coming in and going out each month, and you can make sure that your bill is paid on time. To make a budget, start by tracking all of your income and expenses for one month. Then, create categories for your expenses and figure out how much you can afford to spend in each category. Finally, set up a system for tracking your spending so that you can stay on track.
Create a Budget
The first and best way to avoid missing a monthly payment is to create a budget. If you know how much money you have coming in and going out each month, you can better plan for your expenses. This includes putting money aside for your credit card bill.
If you’re not sure where to start, there are many budgeting tools and resources available online. You can also find helpful tips in our article on creating a budget.
Once you have a budget in place, make sure you stick to it. Review your expenses regularly to see if you need to make any adjustments. And if you find yourself struggling to make ends meet, there are options available to help you get back on track.
Consider a Debt Consolidation Loan
One way to avoid missing a monthly payment is to consider a debt consolidation loan. This type of loan can help you pay off your debts, including your credit card debt, in one lump sum. You’ll then have one monthly payment to make, which can be easier to manage. Plus, you may be able to get a lower interest rate on a debt consolidation loan, which can save you money over time.
If you miss a monthly credit card payment, you will be charged a late fee. Your interest rate may also increase, and you may lose your grace period. Additionally, your credit score will drop, which could make it difficult to get approved for new lines of credit in the future.