Credit cards, like any other kind of credit or loan, have their own set of advantages and disadvantages. On the one hand, it allows a person to shop without worrying about their money account. Inability to pay credit card bills on time, on the other hand, might send a person into a cycle of looming debt.

There are times when deferring credit card payments seems like a good idea, especially if you’re in the middle of a financial crisis and you make sure it is budgetable. Ignoring credit payments, on the other hand, might result in implications that are severe enough to have a long-term impact on one’s financial situation, in addition to delayed payment penalties. The reasons for making every attempt to eliminate late credit card transactions are listed below.

Penalty for late payments

The high late penalties levied by banks and other financial institutions are one of the reasons why anybody would avoid late contactless payments. According to RBI guidelines, a late fee is levied if a credit cardholder fails to pay their bills three days after the set deadline. The late fee is subsequently applied to the next cycle’s bill, which can be rather expensive for the cardholder.

A higher rate of interest

When a credit card transaction is overdue for more than 60 days, the credit card company normally charges a penalty interest rate. Numerous credit card firms levy a penalty rate that can be as high as 30% of the overdue bill amount.Because after the credit card bill has already been paid immediately for six months, the increased interest will be charged on any future purchases or cash withdrawals.

Period of no interest

The outstanding debt is carried forward if a consumer pays only the minimum due or misses a repayment. The interest-free term ends once the rollover facility is used. On the remaining sum as well as following purchases, interest will be levied. Only once the entire debt has been paid in full is the investment period resumed.

Problems in debt collection

Once an account has been in collections for the last several months, credit card firms will go to any length to recover the debt. They may even request extra charges, which are regrettably not unlawful.

A poor credit rating

Every banking financial institution analyses a person’s credit score when they apply for a loan or a bank account. The credit score assesses a person’s creditworthiness as a borrower, or being someone who pays their bills on time.