You probably already know about late fees if you frequently use credit cards. But for those just starting out, it’s something to be cautious about. Sure, late fees aren’t usually huge, but if you keep paying late, it can really add up and hit your wallet. So, it’s super important to know how much the fee is and how to avoid it.
How much is a late fee for credit cards, really? In this article, everything will be explained clearly and in an easy-to-understand way so you can manage your credit card more wisely. Let’s dive in!
Credit card late fees actually vary depending on the bank you use. Usually, it’s around 1-3% of the total bill, with a maximum of IDR 150,000. But remember, if you pay late, it’s not just the fee that adds up—the interest will increase too, making your total bill grow even more.
If your bill is small, the fee may not seem like much. But the fee can be quite a shock if you’ve used your credit card for a big purchase! Since the fee is calculated as a percentage of your total bill, the bigger your purchase, the more the late fee will hit.
But don’t worry, not all credit cards have late fees. Some, like Honest Credit Card, don’t have additional charges such as late fees. Honest Card only has one monthly admin fee. No annual fee or bill payment fee. Relax, the admin fee is adjusted each month based on the remaining principal balance at the time of billing. So, the smaller your remaining balance, the lower the admin fee you’ll pay each month.
If you miss a payment, Honest Card won’t charge a late fee. However, don’t forget that your card will temporarily be unusable for transactions until you pay your monthly bill, at least the suggested minimum payment. So it’s better not to be late!
Besides the late fee, what else happens if you’re late paying your credit card bill? Here’s a quick rundown!
If you’re late in paying, the interest on your bill increases, making your total amount grow. For example, if this month’s bill isn’t fully paid off, interest will keep being added to the remaining balance. So, if you only pay the minimum, the remaining balance will keep getting interest, and your bill next month will be even higher. Over time, it can really add up!
Imagine, you’re just a few days late, but your bill multiplies because the interest keeps adding up. Before you know it, the total is way bigger than it should be. It’s a headache to pay off!
Along with increasing interest, one of the biggest impacts is that your credit score will drop. Your credit score is like your “financial report card” in the eyes of banks or financial institutions. If you always pay on time, your score stays high, but your score will decrease if you’re often late or have unpaid bills. This can have a significant impact if you want to apply for a loan in the future, like a mortgage or car loan.
Imagine wanting to apply for a home loan, but because your credit score is bad, your application could get rejected, or the interest rates might be higher. Banks will think you’re not good at managing money, so they consider you a risk. This makes it harder for you to buy a house with a mortgage.
Another consequence of late payments is that your credit limit can decrease. For example, if you have a limit of IDR 10 million, but because you’re late and interest and fees have been added, part of that limit is automatically used to cover those costs. As a result, the remaining limit you can use for shopping or other needs becomes smaller.
What used to be a flexible limit suddenly gets reduced by unpaid bills. This limits your freedom to use your credit card like you normally would, which can be challenging when you need it for important things.
If you frequently pay late, be careful—you could end up in a “debt cycle.” Every time you’re late, not only do you get hit with fees, but interest keeps building up. If you only pay the minimum or don’t pay at all, your debt will continue to pile up month after month. In the end, a bill that started out small can grow much bigger due to the accumulating interest and fees.This makes it hard to get out of debt, as new bills keep coming in, but the old debt isn’t paid off yet. That’s why it’s so important to be disciplined and pay on time. If possible, pay more than the minimum to clear the debt faster and avoid it becoming overwhelming.
Late with your credit card payment? Don’t panic! This happens to everyone sometimes. But to avoid making things worse, here are a few solutions you can try. Let’s check them out.
If you’ve already passed the due date, the most important thing is to pay the minimum amount first. This can help prevent bigger late fees and prevent your credit score from dropping further. If you’re using an Honest Credit Card, you can easily set your payment amount directly through the Honest app without hassle.
No need to worry about installment plans for 3, 6, or 12 months. Just choose how much you want to pay through the app. You can even see the interest applied before deciding on the payment amount. Super practical, right? Simple and no surprises!
Don’t hesitate to contact your bank if you’re having trouble paying your credit card bill. Just explain your financial situation and ask if they can offer options like an extension or waiving the fee. Most of the time, they’ll have solutions to help you out.
Banks would rather help you than see you stressed about debt. So don’t be shy—ask them and find out what they can offer. Sometimes, just talking to them can make your situation feel more manageable.
Lastly, to avoid future late payments, enabling auto-pay on your credit card app is a good idea. This way, your bill will be paid automatically, and you won’t have to worry about forgetting. It’s more practical, especially if you tend to forget payments. This is a great precaution to avoid future late payment drama!
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