Credit Card Delayed Payment

The credit card delayed payment refers to a condition when a credit cardholder fails to clear the credit card bill on time. Users may have various credit card bills due on separate dates. Not setting up autopay can lead to missed payments.

Sometimes, credit card users forget the due date and miss their payment deadline. At other times, they may not have sufficient balance to clear the dues. However, clearing the credit card dues late can have an unfavorable impact on the card users' finances. It may even damage their credit scores if payments are delayed multiple times.

A credit card delayed payment is the default on timely clearance of the credit card bills by the cardholders. In other words, credit card users miss the deadline for repaying their credit card dues. At the same time, a due within 30 days will not have a considerable impact on the credit scores of the cardholders, other than the late payment fees, if any. But, if the credit card bills remain unpaid even after a month, it can have severe repercussions on the credit scores and the benefits allowed to the credit card users. 

Now, let us discuss the various stages of late credit card payments and their impact on credit scores:

• 30-day Delayed Payment: A 30-day late payment of credit card bills can bring down the cardholder's credit score by 50 to 100 points. The bank will inform the user of the missed payment deadline.
•  60-day Delayed Payment: If the dues remain overdue for 60 days from the scheduled date, the credit score will fall by more than 100 points. Also, the defaulting user will be liable to pay late fees and penalties.
•  90-day Delayed Payment: Further, a credit card payment delay of 90 days or more can result in a decline in the users' credit score by around 180 points. Also, the cardholders' accounts may go into collections.
•  120, 150, And 180 Days Delayed Payment: If the credit cardholders default for more than four months, the bank can sell such accounts to debt collection agencies. They can even file a lawsuit against the defaulters. Also, their credit scores can fall beyond 180 points. 

However, if credit cardholders face trouble paying off their credit card dues immediately, they may request additional time from the bank. They can also ask the bank to waive the late fee. Also, they can get the help of a credit counseling agency to plan their credit, finances, and budget. Further, if a credit card user doesn't have any money, they can file for bankruptcy. 

While credit cardholders have a reason behind every late payment, the banks would generally consider it to be an excuse. Let us discuss the various situations when a credit card user delays the bill payment:

1. Genuine Emergency: At times, the cardholders couldn't pay their credit card dues on time due to an accident, medical emergency, layoff, or other unavoidable circumstances.
2. Missed Due Dates: Although it shouldn't happen, sometimes the credit cardholders forget the due date of a particular credit card bill. This may happen when the user has multiple credit card bills due on different dates.
3. Insufficient Funds: The credit card user may have overused this debt instrument and then couldn't make the payment on time due to a shortage of money.
4. Postponement: Some users may think they can pay the dues later. They wait until the last moment and then eventually miss the due date.
5. Postal Lag: Users who haven't registered for electronic bills may miss the due date because of delays in receiving the physical bill. The bill might arrive late through the post. 

Sometimes, credit card users don't give much significance to missing out on clearing their credit card bills timely. However, such delays can highly impact their financial well-being. Let us take the following examples: 

Example #1

Suppose there are two credit cardholders, Sandy and Gracy. Now, both have delayed their credit card payments. However, Sandy has a 30-day missed payment of $270, while Gracy had a credit card due worth $250 for 90 days. While both were charged a late fee of $8, the late payment affected their credit scores as follows:

While Sandy will receive an intimation from the bank to pay off the dues, Gracy will face more severe consequences. She will be contacted by the debt collector for recovery. 

Example #2

The Consumer Financial Protection Bureau (CFPB) has enforced a rule to cap excessive credit card late fees, potentially saving consumers up to $10 billion per year. In 2022, cardholders paid a record $130 billion in credit card interest and fees. Notably, over 45 million cardholders face late fees due to delayed credit card payments, averaging $220 per household annually. 

Also, the U.S. credit card debt reached $1.13 trillion, with an average balance of $6,360 per consumer. Further, the credit card late payment rates rose in 2023, with serious late payments (i.e., 90+ days overdue) increasing by more than 50%. The national average credit score is currently 717, which is 1 point down from early 2023, marking its first decline in over a decade. 

The credit card users should make timely payments to avoid the following adverse consequences:

• Loss Of Benefits: Credit cardholders may lose various benefits, such as a decrease in their credit card limit
• Poor Credit Score: Late credit card payments result in decreasing credit scores with each passing day, which can spoil the cardholder's creditworthiness. On the contrary, timely payments can improve the users' credit scores.
• Accrued Interest: The user will end up paying interest on the outstanding amount plus interest when the credit card bills become due for an extended period.
• Late Fees and Penalties: Cardholders would be charged $8 if they fail to meet the credit card dues on time. Also, they have to pay a penalty depending on the number of days the payment has been delayed.
• No Interest-Free Period: If the credit cardholders default on bill payments multiple times, the provider may withdraw their interest-free period as a penalty.
• Higher Interest Rates: Credit card issuers levy a considerable interest rate (up to 30%) when the credit card bills remain due for more than 60 days. 

Credit cardholders tend to make late credit card payments out of carelessness or sometimes for genuine reasons. However, such a situation can be prevented by following these tips:

• Immediate Payments: Credit card users must prioritize their credit card bills above everything else. They must ensure that dues are cleared before the due date.
• Payment Reminders And Alerts: The cardholders must set a credit card bill alert. Moreover, they can set a reminder for timely intimation of the dues.
• Credit Cards Without Late Fees: Users can avail themselves of more competent credit cards that have no late fees for delayed payments.
• Autopayment: The best way to avoid payment delays is to opt for an autopay on the mobile app or at the bank, which will allow an automatic deduction of the credit card dues from the linked bank account.
• Adjust Due Dates: The cardholders can slowly adjust the due dates of various credit card bills to have nearby dates for paying the dues. Preferably, they should aim for the first week of the month when their salary drops into their accounts.