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Many people view the consequences of a late payment as something that is insignificant and not worth worrying about.  After all, the person pays a nominal late fee and that is the end of the story, right?  Wrong.  Late payments on your accounts can have a number of devastating consequences that you may not be aware of until it affects your life in a major way.  In these days of tightening credit standards and lender’s reluctance to lend to any but the most worthy borrowers, the pain created by multiple delinquent payments on your accounts may be felt sooner than you think.

The Late Fee
The first result of a delinquent payment is the late fee that is charged to the account.  The amount of this fee can range between $5 and $39, depending on the type of account that the payment was going towards and the individual rules of the company that issued the account.  Although some people may believe that the amount of the late fee is too small to worry their head about, the truth is that paying a late fee is giving your money to a company for nothing and multiple late fees will begin to add up and hurt your wallet more than you can imagine.

Account Default
If your payment becomes late by thirty days or more, it could throw your account into default.  This means that your account is no longer in good standing and the company will consider you to be a risk to their bottom line.  Having your account placed into default makes it much more difficult to do business with the company holding the account because you have showed yourself to be untrustworthy when it comes to paying your debts.

Higher Interest Rates
Even if the payment for the account is only hours late, most creditors reserve the right to dramatically increase your interest rate in the event that a payment is not made in time and will exercise this right in the majority of the cases that they come across.  The increase could double or even triple your interest rate, which could be financially devastating if there is a large balance on the account.  In some cases, some people that have made a late payment on a credit card account have seen their interest rates skyrocket to almost 30%.

Universal Default
In one of the worst consequences of a late payment would have to be triggering a universal default clause for your accounts.  Under this clause, if you default on one of your accounts, creditors can apply the default to all of the accounts that you hold, triggering massive interest rate increases across the board.  For example, if you have four credit cards and you make a late payment on one, the interest rate for all four cards will rise as if you had defaulted on all four accounts.  The accounts do not have to be issued by the same creditor for universal default to take place because as soon as other creditors see the late payment on your credit report, they will automatically invoke the universal default clause.

Decrease In Credit Score
In addition to placing a blemish on your credit report, a late payment can decrease your credit score by a significant amount.  When the late payment is reported to the three major credit bureaus, they respond by deducting points from your credit score.  Because it is much easier to decrease your credit score than to increase it, the results of the decreased score, such as higher interest rates and the denial of credit, can follow you for a number of years before you can get your credit score back up to its previous level.