How a Late or Missed Payment Can Impact All Your Bills
by Ellise Walsh

You may think that if you are late on one bill, only your relationship with that one creditor will be affected. Unfortunately that might not be the case. Some of the largest credit card companies have begun penalizing creditors who are late with payments, even if they have not been late paying their credit card.

Creditors routinely use information found in their customers’ credit reports, and they use that information to penalize customers who have been late on other payments as well as their own. While this may not seem fair, it is perfectly legal, and the practice is becoming more commonplace. So beware, that late or missed payment can affect more than you think.

If you miss or are late with a payment to one credit card, you could find the interest rates on all your credit cards taking a significant jump. In some cases, the interest rate can immediately leap to the highest level allowed by law, even after only one missed payment.

Lenders justify these practices because a missed payment can mean that a consumer is now a higher risk than he or she was when the card was issued. The higher interest rate simply reflects the higher level of risk inherent in the unsecured loan.

Unfortunately, many credit card customers are unfamiliar with these rules, and they find themselves blindsided by these decisions. The rules that allow these credit card hikes are often buried deep in the fine print of credit card inserts, where few people will read them.

It is also important for consumers to remember that all credit card issues conduct periodic credit checks on their cardholders. Any negative information on a credit report could trigger a rate increase. Therefore, it is important to keep your credit record clean, and to report any errors to the credit-reporting agency immediately. Financial experts recommend that every consumer check their own credit report at least once a year.

It is also a good idea to keep a list of all your recurring bills and the days they are due. Keep this information on a calendar or in a conspicuous place. Keeping this list will help you remember to pay the bills on time and prevent any late payments. Many consumers use this simple strategy to make sure no payment is ever overlooked.

If you'd like to submit your own article click here!

All information contain within is owned and Copyrighted by PlanaBudget.com ™.
All information is deemed to be accurate but is in no way guaranteed.