Whether it's running late to class or turning in late work, we can all agree that being late is stressful. But we’re all human, and we should be allowed to make a mistake or two. Unfortunately, most credit card companies don’t feel the same way.
If you make a late payment on your credit card, things can get ugly fast. Even if you make a late payment by accident, even if you have the money to pay your bill, your credit card company can make you pay - in more ways than one. Late payments can result in additional fees, increased interest rates, decreases in your credit score, and a lasting impact on your credit report. It’s easy trap to fall into, and it’s how most credit card companies make a lot of money Fizz, on the other hand, does things a little differently. Read on to find out how.
Late payments are expensive
When you use a traditional credit card, you’re required to pay off your balance or make a minimum payment once a month. The card company will usually send you a statement and you’ll have about three weeks to make the required payment. If you fail to do so, you’ll have missed a payment.
There are plenty of ways that credit card companies can hurt you when you miss a payment. Even if you pay your card off just one day late, you can be charged up to $40, depending on the credit card provider. It typically doesn’t matter why you missed the payment, so don’t expect your provider to be sympathetic.
Late payments also often result in a penalty APR or a penalty interest rate - an increase in the interest rate on your credit card. Credit card interest rates are already sky-high, but these penalty rates can get as high as 30%.
Here’s a penalty APR example: let’s say that your regular APR is 15% and you owe $200. Instead of paying $30 in interest, you could now be paying $60 in interest - double the amount you would have paid before!
Late payments hurt your credit score
Late payment are the biggest factor when it comes to determining your credit score. Specifically, payment history accounts for nearly 35% of your credit score. A payment that’s 30 days overdue can lower your credit score by 100 points. To make matters worse, late payments can remain on your credit report for up to 7.5 years. And making on time payments after the fact won’t save you.
It’s not an exaggeration to say that late payments can have a bigger negative effect on your credit than any other factor. Your credit utilization, hard credit pulls, age of accounts, and other factors might swing your score by a few points here and there. But late payments can ruin your score like none other.
Fizz helps you avoid late payments
Everyone makes mistakes. So why should you let yourself be so severely punished by your credit card company for one late payment?
Fizz is the simple solution to avoiding all of these unnecessary pitfalls of using a credit card. At its core, Fizz is a debit card designed to be paid off on a daily basis. We offer a daily Autopay feature that automatically pays off your purchases every day via your connected bank account. With daily Autopay enabled, you won’t end up with a surprising bill at the end of the month.
If you want to pay daily payments yourself, or if you would rather pay on a weekly or even a monthly basis, that’s ok too. At Fizz, we want you to be able to learn about how credit works - but without having to worry about fees and interest rates. We also have a feature called SafeFreeze that will lock your card if you miss a payment. While it’s also an optional feature, SafeFreeze can keep you from overspending by reminding you that you have purchases you haven’t paid off yet. The cherry on top? Even if you do miss an official payment due date, we’ll lock your card to keep you from adding to your balance and we’ll give you a full month to make up for it before we report anything to the credit bureaus.
Remember, Fizz doesn’t charge fees or interest and it's completely free to use if you sign up while you're in college (non-college users pay $10 per month). Even if you miss a payment here and there, we won’t take advantage of you. Our goal is to help you use credit in a way that’s responsible and beneficial to you, so that you’re prepared for your financial future. Plus, Fizz offers rewards at national and global brands that students love, as well as popular on-campus spots.
With Fizz, you won’t have to worry about late payments or extra fees. You can just sit back and relax knowing that Fizz is helping you on your journey towards a better credit score and an independent financial future. Sign up for a Fizz card today to stop worrying about late and missed payments!
Sam is a Kenyon College alum and is head of content at Fizz. He's been a go to personal finance resource among his peers since getting his first credit card during his sophomore year of college. He hails from Washington, DC, loves all things aviation, and currently lives in Los Angeles.