March 17, 2025
While postponing a credit card payment may seem like a temporary solution during financial hardship, the repercussions extend far beyond late fees. Delinquent payments can trigger a cascade of financial challenges with long-term implications. Below are six key reasons why timely repayment is essential.
1. Significant Late Payment Charges
Financial institutions impose steep penalties for overdue payments. As per RBI guidelines, if dues remain unpaid beyond three days past the due date, a late fee is levied. These charges are added to the next billing cycle, increasing your overall liability.
2. Elevated Interest Rates
If a payment remains unpaid for over 60 days, issuers may apply a penalty interest rate—often as high as 30% on the outstanding balance. Even after resuming timely payments, this elevated rate may continue to apply to future purchases and cash advances.
3. Forfeiture of Interest-Free Period
Failing to pay the full amount or settling only the minimum due causes the balance to roll over, eliminating the interest-free period. As a result, both existing dues and new transactions begin accruing interest until the total outstanding is cleared.
4. Escalating Debt Burden
Outstanding balances continue to accrue interest—even if the card is closed. Converting dues into EMIs or opting for a personal loan may offer structured repayment at lower interest rates. Otherwise, the debt can compound rapidly, exceeding the original amount borrowed.
5. Recovery Actions and Extra Charges
Extended non-payment may prompt issuers to initiate recovery proceedings. This can include persistent follow-ups and additional administrative fees, further inflating the total amount owed.
6. Adverse Impact on Credit Score
Credit scores are a critical factor in loan and credit approvals. Missed payments are reported to credit bureaus, leading to a drop in your score and reducing eligibility for future credit products.
Timely credit card payments are not just a financial habit—they’re a safeguard against escalating costs and credit damage. Staying disciplined ensures long-term financial health and access to better credit opportunities.
