1 Late Card Payment Has Harsh Consequences

NEW YORK (LowCards.com) -- Life gets busy. Every so often, a bill can get overlooked or paid late. It can happen regardless of your credit score or income level. But if you miss a payment on your credit card, there can be a big price to pay.

It does not matter what your credit history is or how long you have made on-time payments. If you miss making one minimum payment by the due date, you will likely get a notice that your issuer will charge a higher interest rate on future purchases. This can be accompanied by a late fee and lost reward points. A missed payment is an expensive mistake.

Here are some possible consequences from missing one minimum payment:

  • Late payment fee. The fee can range from $15 to $35 and will be added to your balance.
  • Interest charges. You will have to pay interest on your balance. This is quite a shock if you always pay your balance in full. The amount of interest will depend on the APR for your card.
  • Higher interest rates. If you have a late payment, you will be subject to a rate increase on new purchases, and the extent of the increase can be confusing.

Your issuer has to provide 45 days' notice of the increase and conditions and say when they start. The APR increase on new purchases can be as high as the penalty APR -- from 27% to 29.99% with most issuers. The new interest rate will apply for at least six billing periods, but if you make all six of these payments on time, the CARD Act requires your issuer to review your account and, if appropriate, reduce the interest again.

If your payment is more than 60 days past due, your issuer can give a 45-day notice and increase the interest rate on your existing balance. Again, if your make at least the minimum payments on time for the next six months, the issuer has to review your account and, if appropriate, lower your interest rate.

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