Paying your accounts on time is a good financial habit everyone should entry to follow, especially since it can negatively affect your finances, if not done properly.
So, what could possibly be affected if you’re paying your accounts late?
Credit score
When borrowing Credit or applying for things such as a cell phone contract or a bank loan, creditors will always check your credit score, which show how often you pay our accounts and if they are up to date. If your credit score shows negative information, it may be difficult to get credit accounts when you need them. If you have managed to keep a good credit score, you can make further savings when taking up new credit by getting charged lower interest rates by creditors.
Interest charges
This can be very helpful when you have high-interest credit. The longer you owe your creditor, the more interest you will end up paying overtime.
E.g. If you had a bank loan for R10 000. When making monthly payments, you need to pay the full monthly balance that’s due or more if possible, on or before your payment due date to save on additional interest charges.
This will allow your creditor to update your credit score with the new balance too.
In addition, paying off your loan earlier will save you even more interest over time.
E.g. If your loan was to be paid in 24 months and you are able to pay it over 18 months, you would save 6 months’ worth of interest.
Late fee or penalties
The longer you wait to pay your accounts the more penalties and late fees you may be charged by the creditors. Your Credit report will also be updated by how long overdue your accounts are, causing further damage to your profile.
There is simply no other way around it. Paying your accounts late is costing you money that could’ve been put to better use elsewhere. Be money smart, and ensure you pay all your accounts on time – every time.
