Key Reasons For Prioritising Timely Credit Card Payments

Do you often miss the due dates for your credit card bill payment? If you forget to check your credit card statement online or don’t pay attention to your credit card billing cycle, this detailed guide could be helpful for you to understand the importance of timely credit card payments.

Your credit card provider may penalise you when you fail to pay your bill. They could report your late credit card bill payments to credit reporting agencies, and your credit score may get affected. Payment history is one of the crucial factors credit reporting agencies consider when calculating and assigning credit scores. With a dwindling credit score, getting approved for credit in the future could be more difficult. In the face of persistent non-payments, your credit card provider may take legal action to recover your debt.

Top reasons to prioritise timely credit card payments

1. Avoid late fees

Efforts to keep credit card costs low are undermined by making late payments. Most credit card issuers charge additional fees for late payments, ranging from Rs 100-1200, depending on the company, outstanding balance, and the delay duration. According to the Reserve Bank of India (RBI), credit card issuers are permitted to start charging late payment fees as early as three days past the due date. These fees are added to your balance for the next billing cycle and can accumulate if not paid promptly. Avoid credit card late payment charges and save money by paying your bills on time. Set reminders, automate payments, or consider using payment apps to stay organised and prevent costly late fees.

2. Get out of debt

In addition to late fees, credit card issuers may also impose interest charges on the outstanding balance of your credit card bill. Accumulating interest and penalty fees can increase debt, making clearing your credit card balance monthly challenging.

3. Enjoy promotional rates

Some credit card providers offer limited-time promotional rates that help reduce credit card costs. For instance, you may be offered 0% APR on balance transfers or new cards for a specific period, such as 12 months. During this promotional period, you only need to pay the exact amount you owe without interest or extra fees. However, it’s important to note that late payments may result in the withdrawal of promotional rates, subjecting you to high-interest rates. Paying your balances promptly will help you avoid this dilemma.

4. Maintain your credit limit

Late credit card payments can impact your credit card limit, reducing your available credit and making it more difficult to meet unexpected financial obligations. Additionally, your credit score may suffer, putting you in an odd position.

5. Avoid embarrassment

Ensure timely payment of your monthly credit card balances to prevent collections agencies from contacting you for debt recovery. Dealing with the embarrassment of such attempts, including letters, emails, phone calls, or visits to your residence or workplace, can be highly undesirable.

6. Avoid legal action

In rare cases, credit card companies or their collections agencies may initiate legal actions against individuals with outstanding credit card debt. To prevent any distressing developments, paying your bills before the due date is advisable.

Consider setting up automatic payments through your financial institution to facilitate easier payments. This will significantly reduce the likelihood of missing payments. Regularly checking your credit card statement online and keeping track of your billing cycle is also crucial for staying aware of upcoming due dates and ensuring timely payments.

Conclusion

Avoiding late credit card bill payments is essential for maintaining good financial health. Late fees and interest charges can have a negative impact on your credit score and may affect your eligibility for future credit. To address this situation, it is recommended to implement effective and proven steps, such as setting up automatic repayments to ensure that your card balance is paid before the due date.