Paying Late Will Be Expensive Next Year
Posted on October 8th, 2008 in News |
There are indications that paying credit card bills late could have severe repercussions for consumers this new year.
That’s because late fees on credit cards have become astronomical. If, for instance, you fail to pay your January credit card bill on time, you could be hit with a $39 late fee.
That’s in addition to the higher interest rates you may be charged for your delinquency. If you are late just one time in paying your bill, you could face an annual percentage rate of 30 percent or more. In addition, your credit card company could end up reporting the late payment to credit bureaus. The bureaus may make the fact known to your other credit card companies, which could result in higher interest rates on your other credit card bills. That could mean you’ll be paying hundreds of dollars more each year in interest charges.
However, if, over a 6 or 12-month period, you pay your bills on time, you could see your interest rate fall once again.
The reason why credit card companies raise rates is that they maintain that a customer who doesn’t pay on time represents a greater risk. According to the American Bankers Association, a late payment may be a sign that the customer will not be paying off his or her balance.
Meanwhile, consumer advocates are arguing that interest rates and late fees have soared to outrageous heights and that it’s time for regulators to take action. It’s unfair, they say, for one financial mistake to cause a customer possible financial ruin.
Customers who see their interest rates rise have the option of switching their balances to lower-interest cards. However, they may find that their card offers dry up when their credit scores worsen. Financial experts say that the bottom line is that consumers need to pay their credit card bills on time-or face hefty penalties.
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