A “past due” account status is no good news at all when it comes to your credit card account. The longer your account status reads past due, the worse it is for your account standing and your credit rating. Let’s analyze what it means to be past due on an account.
What It Means To Be Past Due On An Account
When your account reads past due, that implies that the minimum required payment was not applied to the account as of the last payment due date. Your account technically becomes past due after you miss the payment. Some credit card issuers immediately apply a late fee to your credit card. The account stays in past due status till you make the needed minimum payment to make your account current.
If your account is in a past due to status, you may be charged a late fee, have your interest rate increased, or lose your ability to make purchases on your account. For those using rewards credit cards, you may lose all the rewards you’ve earned to date. A past-due status can apply to any account that needs regular monthly payments that must be made by a specific date.
Things That Happens When You Are Past Due on An Account
If your account reads past due on the day you miss a payment, the good news is that you still have time to correct it, before it affects your credit rating. Your credit report will not show that your account is past due until your payment is 30 days late. Immediately the past due status is reported to the credit bureaus, that’s when it affects your credit score.
When it gets to 180 days ( or six months past due), your credit card gets charged off. This implies that you will not have the option to meet up on the amount due balance and resume regular minimum payments. Rather, you’ll only have the option to pay the balance in full. Also, your credit card issuer may assign or sell the account to a collection agency for further collection.
You may also get charged a late fee each month that you’re past due. Note, these fees add up quickly, thus the longer you go past due, the more it will cost you to become current on your payments. After 60 days past due on your credit card account, your lender may increase your interest rate to the highest penalty rate. In some cases, the penalty rate can stay in effect for any new balance even after your account current is paid off.
The grace period is beyond the due date during which time your payment can be received without penalty. Some lenders can actually allow a payment grace period.
What’s Included In a Past Due Amount?
The credit card statement includes a past due amount. This amount gets higher than your regular monthly payment based on how past due your account has become. The past due amount is a sum of the minimum payments you’ve missed plus late fees which is added to your account since your last payment due date. This is the amount you must pay to bring your account up to speed again.
How To Get Out Of Past Due Status
Can you get your account out of past-due? yes you can, by paying the minimum payment plus any late fees and interest that you’ve accrued. Immediately you’ve paid the past due to balance, the late fees stop accumulating. Your credit card issuer will report a “current” status to the credit bureaus for that month going forward. If your APR was raised to the penalty rate by your issuer, it will return to the regular APR after you’ve made your next six payments on time.
In the event where you can’t pay the full amount needed to bring your account current, it is best you talk to your creditor or lender about payment options. Your issuer may be able to offer a payment arrangement that will make it easier to get your account out of the fix. Some lenders can apply forbearance to your account and add the past due amount to the balance of your loan and bring you out of past-due status.
There you have it that’s it about what it means to be past due on an account.