Responsible borrowing
What if you don’t make any repayments at all towards your credit card debt? This could wind up not only being expensive, but could also make it difficult for you to borrow again.
If you don’t pay at all or pay less than your agreed minimum repayment, this is classed as a missed payment. Doing this just once could result in your lender imposing a late payment charge, which will be added to your balance. You may also forfeit any special interest rate you had previously been enjoying. Many credit card lenders also charge a fee for late or missed payments, which is capped at £12 per instance.
Should you miss a few more payments, the interest you owe will start to pile up. This will make it far more expensive to clear the balance. Missing these payments will also result in damage to your credit score, which could show up on your report for years and make borrowing during this time very difficult.
If you find yourself in a position where you’re unable to pay off your credit card balance at the agreed minimum rate, you should make an effort to speak to your lender as soon as possible and come up with an alternative arrangement.
However, if you use your credit card correctly and make an effort to clear the balance in full every month so you’re not charged interest, you could find it’s a great tool to have in your wallet. Not only will you enjoy your lender’s protection when you spend as well as any rewards they offer, but by using it responsibly you’re also helping to improve your credit rating – potentially opening yourself up for some of the best deals on the market when you borrow again.