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CONSEQUENCES OF NOT PAYING YOUR CREDIT CARD BILL
That low rate you receive for a credit card offer
can instantly increase to a much higher rate if you miss
making one payment. Even worse, your
credit will be damaged. Therefore it is very important that
you carefully read the terms and conditions of your
credit card so that you know all of the outcomes if you
neglect timely payments.
**Important fact! - It is possible that your credit card
rate increases by as much as 20% if you miss a payment!
There are two types of defaults. Both are gone into
detail below.
The Default Clause
This clause enables your credit card issuer to increase
your interest rate when you miss a payment. If you
want to eliminate the possibilities of having your
interest rate increased, you must familiarize yourself
with your card's default rules. Credit card companies
make their money in interest and are very aggressive in
imposing the 'default clause' when payments are missed.
They give no second chances.
The Universal Default Clause
This clause has much worse consequences for being
late on your credit card payment. If you miss your
payment for one card, and you have other credit cards,
the interest rates of the other cars will also increase.
How is this possible? It is very common for credit card
issuers to check your credit regularly to see if you are
making all of your credit card payments on time. If you
have a missed payment, they will automatically increase
your interest, even if the missed payment was not for
their issued credit card.
Avoiding Defaults
The bottom line is, pay your credit cards on time to
avoid paying higher fees. Below are some basic tips to
follow that will help you avoid missing a payment.
1. Don't apply for a credit card that has a universal
default clause.
2. Settle your monthly credit card bill on time, every
month! Take into consideration the time it will take for
your payment to travel to the credit card issuer in the
mail. Also, if possible, utilize
online banking
to pay bills to
ensure instant account update.
3. Never exceed your available credit limit. Keep your
balances low. A good rule of thumb is to never exceed
40% of your available credit line.
4. Get a
copy of your credit report to make sure that your
accounts are being reported accurately. Learn more about
credit reports.
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