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What happens if you can’t make a credit card payment by the statement due date?
Worried you’ll miss the due date for your next credit card bill? Find out how it could affect you and what you can do about it.
If you miss a credit card repayment, the consequences vary from a late payment fee to a black mark on your credit history. If you know that you can’t pay a bill on time, you should contact your credit issuer as soon as possible to discuss your options.
Use this guide to understand what could happen if you don’t pay your credit card bill on time and how you can deal with it. We also outline some tips for paying your credit card bills on time so that you can avoid these issues in the future and manage your card to the best of your ability.
The consequences of not paying your credit card on time
What happens when you miss a credit card payment varies depending on the circumstances and your credit card provider. Here are some of the key factors you need to bear in mind.
You could be charged a late payment fee.
Some credit cards charge you a fee if you don’t pay the minimum amount required by your statement’s due date. This charge may be around $15, applied after the due date on the statement.
The details are added to your credit history.
Depending on how late the payment is and when you settle it, missing your credit card due date could negatively impact your credit file – and your chances of getting approved for new loans.
You’ll be charged interest.
When you miss a payment, interest is charged for all transactions during the statement period. These costs can quickly add up.
You won’t get any interest free days.
The interest-free period available on your credit card is only available when you pay your balance in full and on time for each statement period. So, if you make a late payment on your credit card, you won’t get any interest free days, which means you have to pay interest for the purchases you make during that statement period. Typically, you also have to pay your balance in full for at least the next statement period to be eligible again for interest-free days.
It could affect your rewards.
Most credit card issuers reserve the right to freeze or cancel your reward programme privileges (including earning points for purchases) if you don’t make a payment by the due date on your statement. The American Express Membership Rewards programme terms and conditions state that they may cancel your enrolment, and you will forfeit any points due if your payment is over 40 days overdue.
It may lead to a default notice.
If you continue not to make payments, it can be classified as being “in default”. This results in an official notification from your credit card issuer and a listing on your credit history. Defaults can be a major black mark on credit files and should be avoided at all costs. As well as the future implications of a default credit card account, you can expect to be contacted by your issuer to settle the outstanding debt.
You could have to deal with debt collectors.
If you don’t make a payment on your credit card account for extended periods, your issuer may pass the debt on to a collection agency. Debt collectors might have a different approach to credit card companies, and it could be much more difficult to deal with the situation if they get involved.
Bear in mind that these consequences are usually imposed over a period of time, and the longer you don’t make a payment on your credit card, the worse things could get. It’s also worth noting that every credit card company has a different approach to late payments. So make sure you read the Product Disclosure Statement (PDS) for your credit card or contact your provider to determine specific details on how a late payment impacts your account.
What to do if you can’t afford to pay your credit card bill on time
If you’re struggling with money and know that you can’t make a payment by the due date on your credit card statement, stay calm. These steps will help you deal with the situation and reduce the impact a late payment could have on your finances.
1. Contact your credit card company.
Call your credit card company using the phone number on the back of your card or in the table below and let them know about your circumstances so that they can work with you to resolve the situation.
In this table, you can find the contact details for your credit card company.
|American Express||Varies per card. Click here for contact information.|
|ANZ||0800 658 044 Mon-Fri: 8am-8:30pm Sat-Sun: 9am-5pm|
|ASB||0800 100 600 Mon-Fri: 8am-8pm Sat: 8:30am-5pm|
|BNZ||0800 275 269 Mon-Fri: 8am-8pm Sat: 9am-6pm|
|The Co-operative Bank||0800 554 554 Mon-Fri: 8am-8pm Sat-Sun: 9am-5pm|
|Farmers||0800 990 077 Mon-Wed: 8:30am-6pm Thu-Fri: 8:30am-9pm Sat-Sun: 9am-6pm|
|Flight Centre||0800 500 450 Mon-Wed: 8:30am-6pm Thu-Fri: 8:30am-9pm Sat-Sun: 9am-6pm|
|Gem||0800 500 505 Mon-Fri: 10:30am-6:30pm|
|Kiwibank||0800 521 521 Mon-Thu: 7am-9pm Fri: 7am-8pm Sat-Sun: 8am-4:30pm|
|Q||0800 119 100 Mon-Wed: 8:30am-6:00pm Thu-Fri: 8:30am-9pm Sat-Sun: 9am-6pm|
|TSB||0800 872 226 Mon-Fri: 8am-7pm Sat-Sun: 9am-5pm|
|Warehouse Money||0800 801 808 Mon-Fri: 8:30am-7pm Sat-Sun: 9am-5pm|
|Westpac||0800 888 111 Mon-Fri: 7am-8pm Sat-Sun: 8am-5pm|
2. Request a due date extension.
If you know when you will have money to pay at least the minimum off your card, you could request that your credit card company extend the due date for this particular statement. If your request is approved, you could avoid fees and negative details on your credit report, but it is at your credit card company’s discretion.
3. Set up an alternate payment plan.
If you cannot pay even the minimum due on your card, you or your card issuer might suggest an alternative payment plan to help you pay off the card balance. Both of you need to agree to this arrangement.
3. Suggest a hardship extension.
If you’re experiencing ongoing financial hardship or illness and don’t know when you can make a minimum payment on your credit card, you may want to consider a hardship extension for a break of repayments.
If multiple debts are a factor, it’s also important to deal with them as quickly as possible so that you don’t end up with many overdue accounts. You can start by creating a budget based on your income and the required minimum payments for each debt, as well as potential interest charges. You may also want to consider consolidating debts with a balance transfer credit card or personal loan to make fewer payments and save money on fees and charges.
Tips to help you pay your credit card bill on time
- Set a reminder. Write the statement due date on your calendar or on your phone to make sure you know exactly when your credit card payment is due. You may even want to set a reminder a few days before the due date to factor in the time it may take for your payment to go through.
- Make automatic payments. Many credit card companies provide an auto payment option for your account. This means the funds automatically come out of your nominated debit or savings account before or on the due date for each statement so that you don’t have to worry about late payments. You have the option of paying the full amount owed, the minimum, or a fixed dollar amount (as long as it’s more than the minimum required), although other charges will still apply if you end up carrying a balance on your card.
- Pay off your card before the due date. If you’re going overseas or know that you might forget about your credit card payment in the future, you could choose to pay off the balance sooner than required. Your statement’s due date is the latest you should make a payment, so transferring money to your credit card account before that is fine. In fact, it could help you avoid interest charges on the balance (which are calculated daily).
- Pay as you go. You can make multiple payments to your credit card account during each statement period. Find out the account details needed for a bank transfer or other payment method, and move the money from your bank account to your credit card whenever you want to make a payment. As long as the amount you transfer adds up to more than the minimum required on the statement, this option helps you avoid late payments. It could also help you save money on interest charges by reducing your balance throughout the statement period.
- Budget for payments. Factoring your credit card payments into your ongoing budget helps ensure you’re financially prepared for each statement due date. You may even want to go over your previous statements and work out your average payment so that you get a clear idea of what you’re likely to owe each month.
- Choose a card that suits your needs. One of the most important things to consider when you have a credit card is whether or not it works for you. For example, if you have a card with a high annual fee and high-interest rate but rarely make purchases and carry a balance, it is more expensive and more difficult to make payments when compared to a card with low fees and a low ongoing interest rate. Think about how you use your credit card and the features you want, and then compare your options to find one that offers the most value based on these needs.
If you’re strapped for cash or not keeping track of your credit card bills, you could miss the payment due date and end up paying more fees as a result. Now that you know the potential impacts and some tips to help manage your credit card payments, you can get your accounts under control.
You might also be interested in:
- How to calculate your credit card repayments
- Guide to reading a credit card statement
- Banks you can balance transfer to and from
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