How failing to pay your credit card can be costly

When people fall behind on paying their bills, they look for places to cut corners. They might ask questions like these: 

  • When is this bill due?
  • What's the worst that could happen if I don't pay this bill versus other bills?
  • What will actually happen if I don't pay this bill?
  • Will I be hounded by creditors if I don't pay this bill?
  • Can I miss a month or two of paying this bill?
  • Will my account be closed?
  • Will late payments and closed accounts ruin my credit score?

While some creditors might offer a one- or two-month hiatus from paying a bill, others will never allow this. They may add costly late fees for any late or unpaid bill-even if the bill is only overdue by one day. Credit card lenders are especially strict about this. The reason is because they can make lots of extra money when customers don't pay bills on time.

If you are having trouble paying bills on time, speak with an attorney about how to find solutions. Don't let financial problems because of credit cards wreak havoc on your finances and ruin your credit score. Seek help to get your finances back on track.

The two main areas creditors make extra money off of customers are in late fees and extra interest charges.

Late Fees - When a credit card customer doesn't pay their monthly bill on time, a flat fee is charged to their account. According to the "CARD" act, implemented in 2009, the federal government capped this fee at $25 for the first offense in an attempt to help consumers. If the consumer is late with payment again within six months, that fee can be increased to $35. According to the "CARD" law, the maximum charge, however, may not be more than the minimum payment that was due.

However, those fees add up and that money could have been used perhaps to pay a minimum payment on the credit card balance or for groceries for the week. In addition to late fees, many other fees exist. You would be wise to understand what fees your credit card charges and know how to avoid the fees.

If you do miss a payment, you could try calling the creditor and asking them to not add the charge to your account. This may work once or twice, but probably not as a habitual request.

Extra Interest - Missing a credit card payment results in extra interest calculated on the unpaid balance. Payment interest on purchases causes the actual price of each purchase to increase. That means that the jeans you bought on sale for $20 just went back up in price and your deal went out the door because the interest charges were tacked onto your bill.

In many cases, people aren't even aware of what the penalties will be if they miss a payment on their credit cards. Do you know your credit card interest rate? 

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