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Late Fees & High Interest – Quick Ways to Destroy Your Credit

Late Fees & High Interest – Quick Ways to Destroy Your Credit


Very often, your loan statements or many other financial commitments (like your rent or mortgage) may show a due date and a grace period. So if your payment is due on the 1st of the month but you have a grace period until the 15th, you don’t really need to pay until the 15th, correct?

No, no and absolutely no!

A grace period is a short length of time given to you before you will incur a late fee. It sounds good in theory. What most people don’t realize is, you continue to pay interest and you’re actually adding to your overall debt. That’s a scary and costly habit. And if your payment is 30 days late, it will be reported as late to the credit bureaus. Since payment history is the single largest component of your credit score, late payments can end up costing you significantly more in the long run.

Another potential downfall is a quick spike in your interest rates. If you accept a rate, especially an introductory rate, on a credit card and your payment is even one day late, that rate can skyrocket. We have seen examples of rates going from 1.9% APR to 29.9%APR because of a payment being only one day late. That can be hundreds, if not thousands of dollars, depending on the outstanding balance.

Your credit score impacts almost every area of your life. It’s not just loans. It can determine if you have to pay a deposit for utilities, how high your insurance rates are going to be and even, in some instances, if you get hired.

So, if your credit score keeps taking hits because you’re choosing to pay late, you’re costing yourself a lot of money and lot of potential headaches. That’s no grace at all.

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