Credit CardsArticles
How Does LendingTree Get Paid?
LendingTree is compensated by companies on this site and this compensation may impact how and where offers appear on this site (such as the order). LendingTree does not include all lenders, savings products, or loan options available in the marketplace.

How Does LendingTree Get Paid?

LendingTree is compensated by companies on this site and this compensation may impact how and where offers appear on this site (such as the order). LendingTree does not include all lenders, savings products, or loan options available in the marketplace.

What are the Consequences of a Late Payment on a Credit Card?

lt-leaf-logo Why use LendingTree?
We are committed to providing accurate content that helps you make informed money decisions. The content on this page has not been reviewed, approved or otherwise endorsed by any credit card issuer. We do maintain partnerships with some issuers, and our site may be compensated through those partnerships. Read our

Editorial Guidelines

At LendingTree, we are committed to providing accurate and actionable content that helps you make informed decisions about your money. Our team of writers and editors follows these key guidelines:
  • We thoroughly fact-check and review all content for accuracy. We aim to make corrections on any errors as soon as we are aware of them.
  • Our partners do not commission or endorse our content.
  • Our partners do not pay us to feature any specific product in our content, but we do feature some products and offers from companies that provide compensation to LendingTree. This may impact how and where offers appear on the site (such as the order).
  • We review and interview both external and internal reputable sources for our content and disclose sourcing in our content.
Citi is an advertising partner.

Credit cards will generally require you to make some form of minimum payment on your balance at the end of your billing cycle each month. It is heavily recommended that you make these payments in a timely manner, and if at all possible to pay off the entirety of your balance each month to avoid paying interest. What will happen however if you do end up missing a payment or end up paying late?

There are three main ways a late or missed payment can impact you financially:

Let’s take a look at the financial consequences of each of these results, when they occur and what you need to know.

Late payment fees

Most credit card agreements have specific fees that will be charged when you are late paying your monthly statement. The amount charged will typically range from $15 to $35 with the amount based on the size of your balance. For smaller monthly balances under a few hundred dollars, this can be a substantial percentage of your balance. A single late payment fee will cost you as much as paying a full year of interest on that balance. A few credit cards like the Citi Simplicity® Card do not charge a late payment fee. Of the three potential downsides of paying late, the penalty fee has the shortest consequences. It’s simply a one time charge.

Sample of Late Payment Penalty Fees in Agreement
What can you do about it?

If it’s your first missed payment consider contacting the company to see if they might waive the late fee. While there’s no guarantee, card companies can sometimes be flexible about fees for customers that have generally been in good standing historically. There’s a possibility that they’ll work with you to have this charge removed.

Higher interest rates from penalty APR

Credit card companies are generally prohibited from selectively raising the interest rate on your personal credit card without giving you 45 days notice and can only do so after the first year. (Note: if your card has a variable interest rate, the actual rate may rise if the Prime rate changes since the APR you offered is actually the Prime rate + some %)

One major exception to this is if you end up being more than 60 days late on a credit card payment. In this case many cards will switch your card APR from the rate you initially agreed upon to the penalty or default APR. The penalty APR will be significantly higher than the regular interest rate you were paying on your card with most companies pegging this rate at 27 – 30%.

The problem with having the penalty rate applied to your card is that most card agreements stipulate that this rate can continue to apply indefinitely going forward. This means that this will have long term consequences on how much keeping a balance on your card will cost in the future. Not all credit cards apply a penalty rate, so it’s a good practice to examine the full extent of your credit card agreement to get an understanding of if this will occur.

Sample of Penalty APR in a Credit Card Agreement
Recovering your original purchase APR

Making continued payments on time is the only way to get the application of the penalty rate removed. You’ll need to pay 6 consecutive billing periods on time to have your interest rate reverted back to the original offer.

Impact to your credit report and credit score

While the late fee is a one time payment and the penalty APR will generally only apply to that card alone, late payments of more than 30 days are reported to the credit bureaus and will be reflected on your credit report. 35% of your credit score is based upon your payment history, or rather the lack of having negative information on your payment history. Late payments on your credit history will reduce your credit score. The size of the reduction will depend upon a few factors including how often you’ve missed payments and what your score was previously.

A lower credit score will impact the likelihood that you will be approved for a credit card, mortgage or loan in the future. It can also determine the interest rate that you will be pay fi you do end up getting approved with higher interest rates associated with a lower credit score. Late payments on a credit report are also classified by the amount of time these payments are delinquent with longer durations having a greater impact on your creditworthiness.

Recommended Reading