Paying your credit card late obviously leads to late fees and a drop in your credit score, but there’s yet another reason to avoid late payments: higher interest rates.


Your card’s terms and conditions typically allow them to hike your annual percentage rate if you’re late with a payment. It’s called a Penalty APR, and Bankrate uses an American Express card as an example:

The variable annual percentage rate on the Blue Cash Preferred card from American Express currently is between 13.24% APR and 22.24% APR. But if you get slapped with a penalty APR, you’ll pay 29.49% APR on any new transactions. The company says the penalty APR will apply if you are late in making one or more payments or a payment is returned. American Express says it will levy the penalty rate for at least 6 months, and will keep that rate in place “until you have made timely payments with no returned payments during the 6 months being reviewed.”


As Bankrate points out, not all issuers are this specific about how long they’ll penalize you. Some simply say the penalty APR will “apply indefinitely.” No one sets out to pay their credit cards, late, of course, but it’s something to be aware of if you ever find yourself in that situation, and it’s another good reason to make sure your payments are timely. For more detail, head to Bankrate’s full post at the link below.

5 gotchas that could be lurking in your credit card’s fine print | Bankrate

Photo by _dinkel_