Delaying payments also adds more to your existing due in the form of penalties that you will only have to bear, which can all add up to quite a sum.
Most of us keep postponing money decisions, which results in making a dent in the long-term goals. While most investors automate their investments every month, despite having a comfortable income, many still find it hard to stick to payment schedules. This includes credit card payments, insurance premiums, utility bill payments, etc.
Experts say most people take this lightly, as they do not see any major impact on their financial situation. However, that’s not the case. Delayed payments of bills including credit cards and other dues not only attract penalties, but also affect your credit score.
History of delayed payments can affect your financial situation in multiple ways. It will show up in your credit information report, which will result in a poor credit score. A poor credit score, in turn, translates into a high cost of borrowing along with stiffer terms when you will need to take a loan.
Rebuilding a credit score takes a long time. Hence, experts say, one who is in the habit of delaying payments should start immediately to pay their dues on time to rectify their credit score, as the delay in payment is not due to a shortage of funds but because of the way one deals with one’s money.
Another serious consequence that you might face if you have insurance, you will end losing your insurance protection. If the premiums are not paid on time or the policy is renewed on time, the insurance companies are not liable to provide cover. This will leave you and your dependents unprotected and open to the risk of shouldering large expenses.
Delaying payments also adds more to your existing due in form of penalties that you will have to bear for the delayed payments and these can all add up to quite a sum. Experts say the excess amount that you pay in form of penalties could otherwise be used to invest in your goals or even spending on things you would like to buy.
In the case of insurance, penalties might also mean your benefits being forfeited. For instance, you could end up losing the benefits of the no-claim bonus (NCB) on general insurance policies. In case of credit cards, you could end up losing all your accumulated reward points on cards, depending upon the term of the product. Additionally, insurers could also refuse to provide cover or you might even be charged a higher premium to provide the cover. In case of a credit card, the company might offer you a lower credit limit, if you keep delaying your dues. All of this will have an impact on your long-term financial situation.
To come out of such a situation, try to automate your investments with your expenses. Sign up for the bill payment services provided by banks and register all your service providers, which will make the payment process easier and thus less likely to be postponed. Also, keep your contact details updated so that you get the intimation of dues and then can take timely action.