Finance Quick Answers
Is it a big deal to miss a credit card payment or two?
Missing a credit card payment or two is becoming a lot
more expensive than it used to be, reports Robert
McKinley president of CardWeb Inc., an industry tracking
service in Pennsylvania. Those who make their payments
on time are among the average who pay 18.75% interest,
the highest in the last seven years. If you miss a
payment or two, "punitive" or high risk rates kick in
boosting interest costs between 25%-32.6%. One bank
imposes a higher rate if you miss a payment on ANY
lender’s card - not just the one it issued. Platinum
card holders get hit with the highest penalties if they
slip up. The penalty on their card for late payment or
exceeding their credit limit is 31% over the industry
average.
The high-risk interest rates that many banks charge are near or above limits set by Missouri and Kansas usury laws. Borrowers in both states must pay them anyway - because the limits apply only to cards issued by banks within their respective borders, regulators say.
Written by:
Sandra McKinnon, Consumer & Family Economics Specialist,
University of Missouri Extension
Cynthia E. Crawford, Ph.D., Consumer & Family Economics Specialist, University of Missouri Extension
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Last update: Monday, July 28, 2008
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