This article considers the consequences of skipping monthly payments. Sometimes we may not live up to our financial expectations due to unforeseen occurrence such as loss of job, divorce, and many more. When any of the above happens, we may choose to skip a particular monthly payment. But which one do you skip?
Recent surveys prove that people are more likely to skip a credit card bill than utility or cell phone bill and more likely to skip the mortgage payment over a credit card payment. Before you make a decision about putting off bills until next month, think about what will happen in each case.
; When you skip Your Utility Payment
You’ll definitely be charged a late fee. Some utility companies won’t disconnect your service after a single late payment. However, if you miss more than one payment, your services are at risk of being disconnected. You may have to pay a restore fee to have your services restored. This is hard.
Consequences of skipping monthly payments ; When you skip Your Credit Card Payment
When your payment is 30 days late, you will pay a late payment fee based on the institution you borrowed from. The financial institution you borrowed from will report the late payment to the credit bureaus. Your credit score will be affected badly. If your credit card has a rewards program, you might not be able to use your rewards until you catch up. Once you miss two payments, your interest rate could increase and you may lose any promotional rate on purchases or balance transfers. This is not a good option either.
Consequences of skipping monthly payments ; When you skip Your Mortgage Payment
This makes the lending institution to start the foreclosure process. Some lenders start the process after a single missed payment while others will give you 90 days. However you do it, the late payment is included in your credit report and will affect your credit score negatively. Next month, you’ll have to pay two mortgage payments plus the late fee to get caught up. Am sure this does not in any way appeal to you.
Miss Your Auto Loan Payment
The financial institution will report the late payment to the credit bureaus after 30 days. This will reduce your credit score. You’ll be charged a late fee and your interest rate increase. The lender may not begin the repossession process after a single missed payment. But, if you don’t get caught up your vehicle is at risk.
When you Miss Your Cell Phone Payment
Your service provider may disconnect your service and charge a re-connection fee. You will still be charged for late payment.
Miss Your Student Loan Payment
The late payment will be included in your credit report and reflected in your credit score. You’ll be charged a late fee and your interest rate could go up.
Consequences of Skipping Monthly Payments
Each time you miss a payment, you get a late fee. When your next bill is due, you must make two months of payments plus the late fee. Catching up with credit cards and mortgages are very hard
To avoid skipping payments, plan ahead and use only the services you can afford.
In case you are sure you cannot pay, call your creditor, or service provider and let them know you’ll have difficulty making your monthly payment. Ask if you can have the due date extended and late fees waived. Make every effort to pay those creditors and lenders that report to credit bureaus — your mortgage, student loan, credit cards, or car loans. Late payments can give you a terribly bad credit.