Credit cards are a great solution for consumers who need goods or services immediately and can budget to pay for these purchases over time. However, many consumers see credit cards as a source of “free money” and borrow money to buy far more than they can ever actually afford to pay back. In these situations, debt can pile up, and consumers do not have the funds necessary to make monthly payments on time.
When Payments are Late
Consumers who do not have the money to make their monthly credit card payments may make their payments late, meaning that they will incur tremendous late fees over time and owe credit agencies even more money. Other consumers may skip their monthly payment altogether. However, missing payments or making payments late can have big negative effects:
- Increased interest rates. Every missed or late payment can increase your interest rates by extreme levels. Depending on the conditions and limitations of your credit card agreement, even just one missed or late payment can have a dramatic influence on your interest rates. Over time, this interest can accumulate and leave you with unmanageable debt.
- Lower credit scores. Your credit score is used by lenders and loan agency to determine your reliability and the relative risk associated with lending you money. Missing payments or payment deadlines can decrease your credit score to dangerously low levels, making it difficult for you to secure loans or borrow money in the future.
Getting out of deep debt can seem overwhelming or just too difficult. Fortunately, with the help of a compassionate Milwaukee debt negotiation attorney, you can begin the process of restoring your good credit rating.