What Happens If You Don’t Pay Your Credit Card Bills on Time?
Last Updated : Jan. 4, 2021, 12:22 p.m.
There are millions of people in India who are using credit cards to enjoy great offers on them and a lot of credit limits. But among them, there are some individuals who make a habit of not paying credit card bills on time or skip the payments. So, you must know the fact that there are many drawbacks of skipping the credit card bill payment or paying only the minimum amount due. It will create a financial burden on you in the later stages and might reduce your Cibil Score. Therefore, you must see the consequences you will have to face if you don’t make the payment of your credit card bills on time.
Consequences of Not Making Credit Card Bill Payment on Time
If you have made a habit of not clearing your credit card bills on the due date or before the due date then you will have to face certain consequences. You can see the consequences below in this article.
Late Payment Fee
The bank will charge an extra fee on the outstanding amount of the credit card bill. The amount of the fee depends on the amount outstanding with the bank. If you have a high outstanding amount then you will have to pay a high late payment fee. You must know the late payment fee of your credit card before you skip any of your payments.
Extra Interest
The bank charges interest on the outstanding amount of your credit card that you will have to pay when you clear the whole bill. So, it is better to clear all your payments on time or else you will have to pay an extra amount as interest.
Interest on Interest
Your credit card interest will keep on increasing after every consecutive non-payment of your credit card bill. Suppose you have a bill of ₹25000 and the interest is ₹2500 than in the next month, the interest will be charged on ₹27500. It means that the bank will charge interest on the previous interest of ₹2500. As a result, it will create a financial burden on the cardholder if he is not paying credit card bills on time.
Reduces CIBIL Score
Your Cibil Score keeps on decreasing after the non-payment of your credit card bill every month. A low Cibil Score will result in the application rejection of your further loans and credit cards. So, it is really necessary to pay your credit card bills on time before the due date to main and improve your Cibil score.
Reduces Credit Limit
If you are not clearing your bills before the due date then the bank will also reduce your credit limit. As a result, you will have to manage your monthly expenses with a low credit limit. In the future, you will have to adjust all your monthly spending in a limited credit facility.
Difficulty in Loan Approval
As you know that frequent non-payment of the credit card bills before the due date results in the reduction of the Cibil Score so in the future, it will be really difficult for you to apply for any loan. You can’t even apply for a credit card if your Cibil Score is low and the bank will reject all the applications related to any debt.
High Debts and Financial Burden
The bank will add interest on the outstanding amount of your credit card bill every month and it will increase your debt. As a result, you will have to face a financial burden if you are not paying credit card bills on time. Therefore, you must clear your credit card bills on time if you want to eliminate all your financial problems.
If in Case You are Paying only Minimum Amount Due
There are some credit card users who clear their bills by paying only the minimum amount due and the rest of the balance remains unpaid. But they might be unaware of the fact that the bank charges interest on the outstanding amount even if you have paid the minimum amount due. It will also create a financial burden as the balance keeps on increasing after the payment of only the minimum amount due.
Conclusion
So, if you are not paying your credit card bills on time that is before the due date then you will have to face a lot of financial burden in the future. Your Cibil Score will reduce and so as your credit limit and there are some other consequences as well that you will have to face if you are not clearing the bill on time. Therefore in order to enjoy a smooth financial debt, it is necessary to make the payment of your credit card bills on time.