Building Credit as a College Student, You Can’t Afford Late Payments on Credit Cards

Many students are eager to get a credit card when they start their first college semester term. Getting a credit card can helptrain you to have responsibility over your finance. You now have a new duty and that is to make sure you have enough funds left every month before the due date so that your credit card bill can be cleared promptly. To make ends meet, you can take up part time jobs to add to your pocket money so that you have enough money to cover up your living expenses as well as paying the credit card bill.

You should do whatever you can to make sure you don’t miss your credit card bill payment for example creating a budget plan that outline all your expenses so that you know what to buy and what not to buy in order to save the exact amount of money for paying the bills. It is important to be discipline and stick to your budget if you are serious about paying your credit card on time. The reason why you want to avoid late payment is that it can make it more expensive for you to afford paying back the card.

When you are late on your payment, the interest rate that is charged to you will automatically become the penalty APR rate. The penalty APR rate is a bit higher than the regular interest rate but the small increase in the interest rate percentage will make a big difference in the amount that you are going to pay back. This is especially so when you keep failing to take on your responsibility to pay for your card promptly and let the card become default for several months. Besides, you also get slapped with a penalty fee for not making the credit card payment punctually.

The credit card company has the right to send your late payment to the credit bureau agency when you are late on payment for over 30 days. As a result, some points will be deducted from your credit score. If you keep up the bad habit of making late payment, the credit score will drop to the level that it will be identified as poor credit rating. When you have poor credit rating, you will feel desperate in trying to get a real bank to approve your loan, because most banks will reject your loan applications upon seeing your low credit score.

The problem with late payment is that the amount you owe keep pilling up until it is difficult for you to pay back. To avoid this, you should make a commitment to yourself that you will pay your credit card bill at the due date every month. If you can’t pay the bill in full, you can make the minimum repayment because at least doing so will prevent your account getting reported as default at the credit bureau.