Missing a credit card payment or two can be very costly. In addition to late fees, if you miss a payment or two, high interest rates, often referred to as "Penalty APRs," can automatically kick in and boost interest costs significantly.
Under the CARD Act and subsequent regulations, if you are late up to 60 days past the due date, interest can only be raised on future transactions and not any outstanding balance. However, at or after the 60-day mark, a credit card issuer can impose a higher penalty APR on outstanding balances as well as long as adequate notice is provided.
The high-risk interest rates that many banks charge are near or above limits set by individual state usury laws. Rates at or above 30 percent are not uncommon. Borrowers must pay them because the interest rate limits apply only to cards issued by banks within that state's borders.
Missed payments can affect, not only the rate of interest you pay on credit cards, but also the rate you pay for other types of credit and even for insurance premiums. Late and missed payments can be costly in many ways! Always make your payments on time.
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