Your monthly bills are coming due and you just don’t have the money to pay for all of them. If you’re like many people, you make a decision to forgo one or more of the bills. But which one do you skip?
Surveys show people are more likely to skip a credit card bill than utility or cell phone bills 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.
Miss Your Mortgage Payment
Your lender begins the foreclosure process. Some lenders start the process after a single missed payment while others will give you 90 days. In either case, the late payment is included in your credit report and will affect your credit score. Next month, you'll have to pay two mortgage payments plus the late fee to get caught up.
Miss Your Credit Card Payment
After your payment is 30 days late, your creditor will report the late payment to the credit bureaus. Your credit score will be affected. Your late fee could be up to $25, or $35 if you've been late another time in the previous six months. 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.
Miss Your Utility Payment
You’ll get charged a late fee. Most 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.
Miss Your Auto Loan Payment
The lender will report the late payment to the credit bureaus after 30 days. The late payment will affect your credit score. You’ll be charged a late fee and your interest rate could increase. The lender probably won't start the repossession process after a single missed payment. However, if you don't get caught up your vehicle is at risk.
Miss Your Cell Phone Payment
You’ll get charged a late fee. Your service provider might temporarily disconnect your service and charge a reconnection fee.
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.
General Consequences of Skipping Monthly Payments
Whenever you miss a payment, you can count on being charged a late fee. When your next bill is due, you'll have to make two months of payments plus the late fee. Because of that catching up can be difficult and it's more difficult the higher your monthly payments are. For that reason, mortgage and auto loan payments are often the most difficult to get caught back up on.
Try to avoid skipping payments altogether by planning ahead and living within your means.
If you find you can’t make a payment, don’t just skip it. Call your creditor, lender, 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. Otherwise, your credit score will be hurt if you miss a payment. Note that all overdue payments can eventually wind up on your credit report if they go into a default status or are passed along to a collection agency.