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The consequences of missing or being late on your monthly credit card payment can significantly impact your financial well-being. Three mn repercussions are possible:
Late Payment Fees: Credit card issuers typically charge a fee for fling to make minimum payments by their due date, which ranges from S$60 to S$100 deping on the card and balance size.
Penalty APR: If you're consistently late with payments, your interest rate might increase to a higher penalty rate.
Negative Impact on Credit Score: Late payments are reported to credit bureaus and negatively affect your credit history, potentially lowering your credit score and affecting your chances of obtning loans or mortgages at favorable rates.
Here's an overview of the financial impacts of these outcomes:
1. Late Payment Fees
These fees are typically assessed if you miss the payment deadline for one billing cycle.
The amount varies by card issuer; for some cards like Citi Cashback Card and UOB One Card, it might be S$60 to S$100 per month.
2. Penalty APR
When your payments are consistently late, your credit card's interest rate could increase to a higher penalty rate.
This only affects the new balance and not previous charges that have already accumulated interest.
3. Negative Effects on Credit Score
Missing one payment by more than 30 days can negatively impact your credit score significantly.
The exact impact deps on factors such as the frequency of late payments and prior credit history.
A low credit score affects your eligibility for credit cards, loans, mortgages, and could lead to higher interest rates if approved.
Action Plan
If you find yourself missing a payment due date:
Contact Credit Card Issuer: Expln your situation and inquire about the possibility of wving late fees or adjusting terms.
Credit Monitoring: Monitor your credit report for inaccuracies that could have been caused by the late payment.
Payment Plan: Consider setting up automatic payments to avoid future missed payments.
To mntn a healthy financial profile, it's crucial to understand how these actions can affect not just your credit card usage but also broader financial opportunities and costs.
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