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Many people believe that missing a credit card payment is a minor thing and that if they make the payment as soon as they have the money, the penalties for missing that payment will be minimal.  In reality, there are a number of penalties associated with missing a credit card payment and the effects of that missed payment can be felt for a long time after the payment has been made.  In order to be able to make informed financial decisions about using a credit card and making the required payments, it is important to know what the penalties are for missing a credit card payment.

Late Payment Fee

The first penalty of missing a payment date for a credit card account is the late payment fee that is assessed to the account.  This fee is charged directly to the account shortly after the deadline for making the payment has passed and is added to the principal balance of the account.  Different financial institutions charge various fees for missing a payment on the credit card accounts they hold, basing the fee on the type of credit card held and the balance of the account at the time of the payment default.  These fees typically range between $25 and $39 per occurrence.

Increased Interest Rate

Many credit card companies use the fact that a payment has been missed on the account to justify raising the interest rate on the account to the highest rate charged by the company.  By missing a payment, the account holder has become a credit risk to the company and in order to recoup as much of their money as possible as quickly as possible, the interest rate is immediately raised.  It is not uncommon for the interest rate assigned to a credit card account to increase by 10% or more due to a single missed payment on the account.

Blemish On Credit History

When a payment is missed on a credit card account, the company reports the default to the three major credit bureaus for inclusion on the account holder’s credit history.  This entry will remain on the account holder’s credit history for at least seven years and can only be removed if the account holder is able to prove that the entry was made in error. 

Drop In Credit Score

Once a missed payment has been reported to the three major credit bureaus, the account holder’s credit score will be recalculated to reflect the account holder’s drop in credit worthiness.  Up to 30% of the credit score calculation is based on the person’s credit history so the credit score can drop by a significant percentage based on a single missed payment on a credit card account.