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Even with no late fees, credit card overdue payments are dangerous

Published: Tuesday, April 23 2013 8:41 a.m. MDT

Some credit cards offer a no late fee charge. It is dangerous to not pay a credit card bill on time however, even with these cards, according to Credit.com.

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Although they won’t be charged for it, paying a credit card payment late on a no late fees card can cost consumers in various other ways, according to Credit.com.

Various cards offer no late fees, whether it is only applicable on the first late payment, or for cards that waive all late fees. These five reasons can help consumers decide whether or not to make payments on time even when it won’t add on fees.

Grace period

Eventually with fees not being paid off on time, the grace period will be forfeited, and all purchases will create interest costs.

Existing debt interest

Interest is calculated based on an average daily balance. Even if the late fee doesn’t exist, any debts not paid off by the due date start accumulating interest. It is safer to pay off the debt a little early, according to the article.

Penalty rates

High penalty interest rates apply on some cards. The Clear Card from American Express had a 27.24 percent penalty rate. Compared to the possible $35 for a late fee, this could be pricier than the latter.

Credit agency reports

Late payments affect credit scores because all late payments are reported to credit agencies. Low scores then increase the insurance rates on credit cards, mortgages and any other loans.

Canceled cards

There are no cards where payments can stop being made, even if they have no additional fees. Too much delinquency makes issuers suspend or cancel an account.

EMAIL: alovell@deseretnews.com

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