Minnesota Credit Card- How Late Payments Can Hurt Your Credit

By: EconomyWatch Content Team   Date: 30 January 2010

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Missing the occasional payment on your Minnesota credit card may not seem so terrible to you but the credit card company you deal with is not likely to feel the same way. The same may be said for late payments. You may not get a call immediately or a notice in the mail but there are things happening behind the scenes with your credit rating and credit report. Not all creditors react the same way to payments that are not made or that arrive late.

Do you know what happens when you pay your credit card bill late? Do you know how it can affect your credit? Let us explore what it would mean for your future.

The creditor for your Minnesota credit card will start by charging you a late fee. When your next statement arrives, you will discover a fee for the late or missing payment. In general late fees can be anywhere from $15 to $35. This depends on the individual creditor. If your payment is late over and over again then the same will be true of the late fees. They will keep coming.

But it does not end with a late fee. The interest rate you are charged will go up. In fact the interest rate will be raised to the default rate. This is the highest rate you can be charged and it is considered to be a penalty. When your interest rate goes up your finance charges increase and suddenly you are paying a higher price in order to carry a balance on your Minnesota credit card.

This is something that many cardholders are not aware of. If you have other credit cards then the interest rates on them could possibly increase as well. Your creditor (or even other creditors) by law are allowed to include a universal default clause in the agreement for your credit card that allows your other creditors to increase their rates as well.

If your payment has gone past 30 days then the credit bureaus- there are three of them in the United States- will be notified by the creditor. This black mark on your credit report is duly noted and will remain on your file for seven years time.

Finally if you have a late payment and have made a habit of it then your credit score will go down. Your history of making payments on your Minnesota credit card composes 35 percent of your credit history. Late payments can have a significant and very negative effect on your credit score. This in turn will affect your ability to obtain new credit down the line.
 


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