Double trouble for credit cards
Wednesday 29 May 19
Have you had struggles getting your credit card paid on time? Sorry to tell you, but it’s about to get worse!
In the past, banks have encouraged their credit card customers to pay on time by charging them large penalties for late payment. However, the government has told them that such practice is not fair. They were charging a lot more than what it cost them for the loss of the use of that money over the time involved. It would appear that the banks have shifted to “plan B.” Let me explain.
From the 12th of March, if a payment is more than five days late you will get a notation on your credit file, according to an article by Shaun Drummond in the AFR Smart Investor. A new and more comprehensive credit reporting system will be in place from that time.
On the encouraging side, this new regime is allowing for positive data to be added to that which is collected by the credit bureaus. You should be benefiting from doing things right.
On the other hand, according to the article, those late payments are going to hurt your score.
The new credit score will not simply be a letter rating like AAA or BB, but instead will be a numerical score. There will not be a universal standard for how that score is calculated, but each rating agency will devise its own proprietary system, according to Drummond.
So, be reminded that how you manage your finances today is going to affect your future, especially when the time comes to apply for loans or “credit worthiness” is needed for other matters.