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7 Reasons to Make Your Credit Card Payment on Time

The Benefits of Timely Credit Card Payments


Every now and then, you may be tempted to put off your credit card payment for a few days, especially when you're low on cash. Sometimes even knowing the consequences can convince you to send your credit card payment on time. You can rationalize a late fee, even learn to live with a penalty rate increase, or worse, choose to suffer the credit score damage from a late payment. But, push those thoughts aside and instead think about the benefits of making your payment on time.

1. Your accounts stay out of collections.

More credit card companies are turning to debt collection agencies when their customers don’t send credit card payments on time. Even the smallest credit card balance can get sent to a collection agency if it goes unpaid for several months. Pay on time and you can avoid dealing with debt collectors.

2. Enjoy a lower interest rate.

Credit card issuers are allowed to increase your interest rate if you’re more than 60 days late on your credit card payment. The penalty interest rate on many credit cards is a staggering 30%.

While the penalty rate will expire if you pay on tie six months in a row, n some cases, the penalty rate will be applied to new purchases as long as you have that credit card. Keep paying your credit card on time to avoid paying a higher interest rate on your credit cards.

3. Avoid late fees.

Thanks to technology, you might be charged a late fee just minutes after your credit card payment is due. Avoid expensive late fees (between $15 and $35) by sending your credit card payment on time.

4. Improve your credit score.

Thirty-five percent (35%) of your credit score is based on whether your credit card payments are made on time. Your credit score benefits the most if you consistently make your credit card payments (and all your other payments) on time.

5. Get lower insurance rates.

Insurance companies increasingly use your credit score to determine your insurance rate. When late credit card payments lower your credit score, your insurance rates could subsequently increase. Sending your credit card payment on time helps you get the lowest insurance rate and therefore helping you save money.

6. Keep your monthly payments low.

When you make a late credit card payment, your next minimum payment will be more than double what it would have been had you not missed a payment. That's because your next credit card payment will include two minimum payments and a late fee. If you have trouble making your credit card payment, putting it off won’t make it easier to pay. Instead, the opposite happens.

7. Keep your credit card in good standing.

You risk having your credit cards cancelled when you miss your credit card payment, an action that could hurt your credit score, especially if you have a credit card balance. Keep sending your credit card payment on time so your account remains open and in good standing.

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