48% of Credit Card Users Aren't Aware of This Major Consequence to Paying a Bill Late

Sometimes, people are late paying their credit cards because they lose track of time. In other cases, they're late paying their credit card bills because their checking accounts have been depleted.

You might assume that being late with a credit card bill is really not such a problem. You'll just deal with the late fee your credit card issuer charges you and call it a day, right?

Actually, wrong. Being late with a credit card bill could have major consequences beyond the late fee you'll be charged. And it's really important to understand that.

It's not just a matter of losing a little money

You'll generally be charged $25 for your first late payment fee and $35 for subsequent ones, according to the Consumer Financial Protection Bureau. Now, if you're down to your last couple of dollars in your bank account, that sort of hit is problematic. But if money isn't particularly tight, you might write off a late fee of that nature as no big deal.

The problem, though, is that there are consequences you might face beyond the loss of $25 to $35. In fact, a single late payment on a credit card bill could cause extensive damage to your credit score. But shockingly, many consumers don't seem to be aware of that.

In a recent survey commissioned by the Consumer Bankers Association, 48% of Americans were unaware of the repercussions of paying a credit card bill late. In fact, almost half of consumers thought, "I pay a late fee and nothing else happens until my next payment is due" was the only consequence associated with being 30 days late or more on a bill.

In reality, being late with a bill could cause your credit score to plunge, making it harder to qualify to borrow money when you need to. Not only that, but the lower your credit score, the higher an interest rate you're likely to get stuck with when you are approved to borrow money. And a higher interest rate could cost you well more than $25 or $35 in the context of a large loan.

There are several different factors that go into calculating your credit score, but of all of them, your payment history carries the most weight. In fact, it accounts for 35% of your total FICO® Score.

Your payment history speaks to how timely you are with bills. And so if you're late with a credit card payment even once, it could result in a lot of damage. 

Also, the higher your credit score is to begin with, the more damage a single late payment has the potential to cause, namely because it's so out of character. So don't assume that if you have a credit score of 800, which is considered excellent, that you don't have to worry about a single late payment. You could end up with a much lower score for making one mistake.

Avoiding late payments

One of the easiest ways to avoid being late with your credit cards bills is to mark your calendar with your various cards' due dates. However, in many cases, lateness stems from a lack of funds more so than forgetfulness. 

To address that issue, try checking your credit card balances every week rather than waiting until your bills actually come due. If you see those balances rising too quickly, force yourself to curb your spending until your next paycheck arrives, or until your billing cycle rolls over.

Also know that as long as you make at least your minimum credit card payment by its due date, you'll be considered timely. So if you have to ask a friend or family member to loan you $40 or $50 to cover your minimum payment, it may be worth doing that if you've fallen on particularly hard times one month to avoid the hit your credit score might otherwise take.

Of course, this isn't something you should do consistently, and it may not even be an option at all. The point, however, is that a single late payment on a credit card has the potential to do a lot of harm. So it's best to avoid that scenario whenever possible.