Given the financial crises induced by the COVID-19 pandemic, not everyone can afford to pay their credit card bills within the due date. When you miss your credit card bill payments, you will have to incur late payment fees and increased interest rates. Besides that, it will also negatively impact your credit score. If you cannot pay your bills for more than 90 days, your credit card account will automatically close. In such cases, your account may be referred to collection agencies.
Consequences of Not Making On-Time Credit Card Bill Payment
As mentioned earlier, if you do not pay your credit cards bill on time, you will not be charged late payment fees, and your interest rates will increase. Therefore, it is imperative to pay the minimum amount due on your credit card to avoid penalties.
If you miss your credit card bill payment one time, it will not be a big deal. But, if you make two or three missed payments, you will have to incur late fees. You will lose your 0% APR, and it may even damage your credit score. Furthermore, if you miss your payments more than three times, you will be charged late fees, hurt your credit score, and you may even may a lawsuit.
So, if you are struggling to pay your credit card bills on time, here are the top tips to ensure on-time repayments:
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Pay The Minimum Amount Due
At times, you cannot pay the entire outstanding balance. That is understandable. It happens to the best of us. However, it is expected of you to pay at least the minimum amount due on your credit card. You have the luxury of paying just the minimum amount to keep your credit account active. The best thing about making the minimum due payment is that you will not have to incur interest charges. You will also be able to maintain your credit score.
If you miss paying the minimum amount due, your credit score will significantly reduce. Having a low credit score makes it difficult to secure loans in the future. Apart from that, you will have to bear interest charges and other penalties.
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Request Your Bank
When there is no other option available to pay the minimum amount due, you can pick your phone and call your bank. Talk to your bank and request to extend the due date. Depending on your relationship with the bank or your repayment history, your bank may offer an extension to give you ample time to make repayments. Keep in mind that you can not make a habit of contact your bank for an extension every time you run out of options.
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Stop Making New Purchases
It is the most logical thing to do during a financially distressing time. If you are already struggling to pay your outstanding balance on time, you should avoid making new purchases and mount more bills to repay. Making new purchases will add to the total balance on your credit card. It means that the interest rate will increase with the increased total outstanding. So, make sure not to use your credit card until you clear all your dues.
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Go For a Balance Transfer Card
If you have pending dues coupled with interest rates, opting for a balance transfer may be the best option available. It is the best debt management strategy that enables you to transfer your outstanding balance to a new credit card with a lower interest rate. It means that you have a new credit card with the same outstanding balance but a lower interest rate. Depending on your credit card, you can even avail of a 0% APR to pay off your debt quickly. It is the best way to reduce the financial burden on your shoulder. It allows you to consolidate your debt and pay it off before you are unable to recover.
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Opt For An Automatic Payment Facility
The benefit of opting for an automatic payment facility is that you can never miss your credit card bill payment. This way, you authorize to deduct the balance from your account without your manual intervention. It eliminates the stress of remembering dates and ensuring on-time. It works best if you are frequently traveling and do not have access to your bank.
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Keep Track of Your Bills
Another way to manage your credit card bills is by tracking your bills periodically. It would be wise to check your credit card statement to ensure that no unnecessary charges are levied by the bank, due to which you are not able to pay your bills on time. Furthermore, it also helps you to detect unauthorized transactions on your credit card and report them to your bank.
