Impacts of late payment on your credit card agreement

Posted by Kelly Luff in Personal Finance on 20 February 2017 - Kelly is a Marketing Executive at checkmyfile

We’ve all done it before – had that mad panic when we’ve forgotten to pay a bill. But what happens if you do forget to pay your credit card by the monthly repayment date?

A few weeks after Christmas I received a late payment letter from my credit card – I’d logged in, thought “I’ll need to make that payment” but then never actually logged back in and paid my credit card.

Cue a quick call to the card provider, who explained the £12 late payment charge to me whilst I asked if a late payment marker would appear on my credit report, as this could then impact on my credit score and future ability to get the best rates.

No it wouldn’t show on my credit report if it was paid within the month, the advisor explained, but it would mean that I’d broken the conditions of the agreement and therefore any complimentary terms would end with immediate effect.

Even as someone that works in the financial industry, I hadn’t thought of this as a consequence of my late payment – they do after all offer me the opportunity to pay a minimum payment of £6, so surely getting the repayment a few days late doesn’t impact on my assumed ability to pay overall?

The card I held offered a generous balance transfer and purchasing period at 0% interest – I’d assumed I’d be keeping the card until I’d finished off paying the modest balance whilst missing any interest payments. Suddenly, I’d have to pay interest from the moment the payment was missed and even though it was a relatively small amount each month, it really annoyed me that I’d now have to look at paying more money on top for what I thought was an innocent mistake.

But I’d broken the original credit agreement with the lender, and lenders only offer benefits like these to customers if they can be trusted to repay them. For instance, those with poor credit scores will always have difficulty getting this type of 0% interest deal, so the onus is on you to ensure you honour the credit agreement in full to ensure that you continue to get preferential conditions.

It did make me think – I’d never read the Terms & Conditions in detail as I never had any intention of doing anything other than making the payments in full and then closing the card. It does stipulate quite clearly that interest-free periods will come to an end when you break the conditions of the contract you’ve signed within the terms.

In the end it meant applying for another card, balance transferring the outstanding amount over, and calling the old card provider to work out how I pay the 3p interest that I accrued.

If I’d made too many applications lately for credit, or been at the top of my affordability already, it might have made opening a new card more difficulty and I could have been left just paying the interest each month because of a silly oversight on my part.

So, read the terms and conditions BEFORE you sign a credit agreement, so that you are aware of what is required of you as the borrower, rather than only looking at what the lender is offering you.

And make sure that you pay your card bill on time, even if it’s just the minimum repayment, either by setting up a Direct Debit or setting a reminder for the bill each month.

Check Your Multi-Agency Credit Report

30 Day Free Trial

How interest rates are calculated

If you’ve ever applied for a form of credit, you may well have discovered to your cost that the advertised APR and the interest rate you’re offered if you are accepted can be very different things.

Published on 14 Jun 2019 by Richard Catlin

Full Article

The Importance of Proving Stability to Lenders

In addition to the key roles that your Credit History and Affordability play in determining whether or not you will be accepted for credit, we regularly talk about the importance of being able to demonstrate your ‘stability’ to potential lenders.

Published on 15 Mar 2019 by Sophie Regester

Full Article

If I Change My Name Can I Still Get Credit?

Legally changing your name is an increasingly popular thing to do in the UK: while getting married or divorced still makes up a large proportion of this, there is a growing trend towards people changing their name following civil partnerships, a change in gender, living in blended families, or simply because they’re seeking a change – the list is long.

Published on 22 Feb 2019 by Tom Magor

Full Article

Which Credit Report Information Can Landlords See

These days whenever you rent a property you may be required to pass checks set by the landlord or letting agent to prove that you will be a good tenant and that you’ll be able to reliably make rent payments to the property on time.

Published on 7 Feb 2019 by Kevin Pearce

Full Article

What Credit Checks Look For When You Switch Energy

As we get deeper into Winter, it’s inevitable that millions of consumers across the UK will end up using more energy and spending more on bills due to the colder weather and long stretches of darkness.

Published on 9 Jan 2019 by Jamie Mackenzie Smith

Full Article

Pros and cons of going paperless

Whether you are environmentally motivated or simply to get a discount for moving your billing online, you might find it makes sense to abandon paper for your business, if you haven’t already.

Published on 7 Dec 2018 by Kevin Pearce

Full Article

How To Get The Best Car Finance Deals

New car sales may have slowed in recent years, with the economy, emissions scandals and Millennials all being cited as the root cause at one point or another. But the number of people choosing to use credit as a means of driving away in a new car continues to rise, according to figures from the Finance & Leasing Association which shows that the new car finance market grew by 15% in July 2018 when compared to the previous year.

Published on 8 Oct 2018 by Kiah Phillips

Full Article

We're Now More Likely To Be Borrowers Than Savers

UK Households are now more likely to be borrowers than savers, with savings at their lowest since 1963, according to a study by the Office for National Statistics. Households are increasingly borrowing more – by taking out loans, car finance, and mortgages – than they are collectively depositing into savings accounts.

Published on 5 Oct 2018 by Sam Griffin

Full Article

The Credit Crunch 10 Years On: What’s Changed?

For many people, especially the those lucky enough to not have been old enough to be directly affected, the economic downturn of 2007-2009 seems like a distant memory. The first iPhone had launched a mere two months before the recession hit, and since then they’ve rebooted the Spiderman film franchise not once, but twice. But more importantly, has enough time passed for the borrowing/lending market to revert to its old tricks?

Published on 26 Sep 2018 by Jamie Mackenzie Smith

Full Article

The Limitation Act 1980 and Debt Time limits

The majority of credit consumers believe that once a debt has been acquired, that debt will remain until the full balance has been cleared regardless of the length of time passed. This may not be the case though, thanks to a little-known piece of legislation known as the Limitation Act 1980.

Published on 19 Sep 2018 by Erika Bone

Full Article
keyboard_arrow_left

keyboard_arrow_right

We are rated number 1 for customer service on