Credit cards can be helpful if used correctly. They provide an avenue to good credit, allow you to rack up rewards and more. However, if you’re misusing them — specifically, paying late, missing payments or racking up more and more debt on a monthly basis — credit cards can be equally harmful. Paying your credit card bill in full each month sounds like a simple concept, so perhaps you think missing a payment here or there isn’t a big deal. Well, here are some of the ways a late or missing payment can hurt you.
A Lower Score. Just as making timely payments helps your credit score, missing payments hurts it. As USA Today notes, the impact on your credit score depends on several factors: Your current score, how late your payment is and how many late payments have been made. If you have a good score, a late payment can drop your score by 100 points. If you have a fair score, it won’t impact you as much because your baseline isn’t as high. Likewise, a 90 day late payment is worse than a 30 day late payment. Also, the more late payments you have across your accounts, the more they hurt your credit score.
Late Fees. Credit card issuers will hit you with a late fee if you miss a payment. By law, the fees are limited to $28 for a first-time late payment and $39 for every late payment after that. Those charges will add up quickly. And many people who pay late do it routinely.
Interest Piling Up. Any time you leave a balance on your credit card, it accumulates interest. How much interest depends on your card’s Annual Percentage Rate (APR). When you get charged interest, your balance increases. This is the same balance that you already decided was too high to pay off in full. This is how late payments can lead to a vicious cycle. Stay ahead of the game and make full payments on time, every time.