Late Payment
What constitutes a late payment on a credit card, the fees and interest consequences, how a late payment affects your credit score, and how to recover from one.
What Is a Late Payment?
A late payment occurs when you fail to pay at least the minimum amount due by your payment due date. Credit card due dates are set approximately 21 to 25 days after the statement closing date, as required by federal law.
Consequences of a Late Payment
Late fee: Most issuers charge a late fee of up to $40 for the first late payment, with some issuers reducing or waiving the fee for first-time offenders. Under current federal rules, late fees are capped and may be further reduced by ongoing regulatory changes.
Interest rate increase: If you are carrying a balance with a 0% introductory APR, a late payment can immediately terminate the promotional rate on many cards, jumping your rate to the standard or penalty APR.
Penalty APR: Some cards impose a penalty APR (as high as 29.99%) when a payment is late. This higher rate can apply to your entire existing balance, not just new charges, and may remain in effect for six months or more before the issuer reviews it.
Credit Score Impact
A late payment is not reported to credit bureaus until it is 30 days past the due date. A payment that is 1 to 29 days late may result in a fee and interest consequences but does not appear on your credit report.
Once a late payment is 30 or more days past due, the issuer reports it to credit bureaus. The impact on your score is significant:
- For a person with excellent credit (760+), a single 30-day late payment can drop the score by 80 to 110 points
- For a person with good credit (680 to 720), the drop is typically 40 to 80 points
- For a person with lower scores, the impact is smaller but still meaningful
The late payment remains on your credit report for 7 years from the date of the original delinquency. However, the scoring impact diminishes significantly after 2 years as newer positive activity accumulates.
How to Recover From a Late Payment
First-time late payment: Call your issuer immediately. Many issuers will waive the first late fee as a courtesy for customers with an otherwise clean payment history. They will not remove the late from your report if it was already reported, but waiving the fee costs nothing to ask.
Before it reaches 30 days: Pay the minimum immediately if you have missed a due date. As long as it is paid before the 30-day mark, it will not be reported to credit bureaus.
After it is on your report: The entry cannot typically be removed unless it was reported in error. The best course of action is to resume consistent on-time payments and let the positive history gradually outweigh the single negative mark.
Prevention
Set up autopay for at least the minimum payment amount on every card. The minimum payment prevents a late from being reported even if you cannot pay the full balance. Then make additional payments above the minimum as your cash flow allows.
See also: minimum payment, grace period.