Lending Club Blog

Paying Your Credit Card Bill On Time

Most of the personal finance advice regarding the payment of credit card bills focuses on the negative effects of only paying the minimum balance due. While these discussions are certainly worth having, paying your bill on time, regardless of the amount, is at least as important.

When your credit card bill gets paid late, a number of things will happen. First, a late payment fee generally applies. Second, interest will be charged on the outstanding balance. Third, a late payment flag may be added to your credit report. Lastly, your interest rate for the card in question (and other forms of credit that use universal default) may be instantly raised to a very high default rate. A single late payment could cause your interest rate to double or worse.

To avoid late payments, you should either automate the process or send in your payments with plenty of time to spare. Sending in at least the minimum payment by the due date is better than sending in a larger amount after the due date. If you are waiting for an upcoming source of income before paying a large amount to your credit card bill, you can always send the minimum by the due date and then make an additional payment once you receive the expected money.

Paying off your entire credit card balance each month is the most responsible way to use a credit card. But regardless of how much you are able to pay, paying at least the minimum by the due date will reduce the significant number of negative effects a late payment can have on your financial situation and credit history.

Do you always pay your credit card bill on time?

Monday, January 19th, 2009 at 6:51 am

Comments (1)

  1. Mike:

    My entire balance is paid in full, every month. I use ING Direct,
    and they mail my checks and don’t even charge for the postage.

    January 22nd, 2009 at 3:55 pm


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