Credit Card: Have you missed payment deadline? You don’t need to pay late free, check this RBI rule

Failure to pay credit card bills within due date often resulted in steep penalties, late fees, and even a negative impact on their credit scores earlier. With the RBI's new directive, customers now have an additional three-day grace period to make their payments without incurring any extra charges.

Credit cardholders were required to settle their outstanding balances on or before the due date mentioned on their monthly statements.

Credit card customers often end up paying extra charges for not making payments of bills within due dates. Failure to pay credit card dues within the deadline also negatively impacts their credit score. However, in those cases where the credit card holder wants to pay outstanding dues but, due to some personal emergency or technical error, fails to complete the payment process, RBI has now come up with a relief.

What is the RBI's guideline on late payment of credit card bills?

The Reserve Bank of India (RBI), in its 2022 "Master Direction," announced that credit card issuers can mark an account as "Past due" to credit information agencies and charge a penalty only if the credit card remains "Past due" for over three days.

Under the previous system, credit cardholders were required to settle their outstanding balances on or before the due date mentioned on their monthly statements. Failure to do so often resulted in steep penalties, late fees, and even a negative impact on their credit scores. However, with the RBI's new directive, customers now have an additional three-day grace period to make their payments without incurring any extra charges.

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Usually, the cost of the late payment is fixed and is charged by banks and credit card issuers, depending on the amount that is due to be paid. Usually, a higher credit amount attracts a higher late fee.

Let us now understand how a bank levies late payment charges on its customers if they fail to pay their dues even after the three-day grace period.

Late fee charged by different banks

The late fee charges may differ from bank to bank and the card issuer along with the taxes. For instance, the late fee for failure to pay credit card bills for State Bank of India customers starts at Rs 400.

In case, a customer of SBI Bank fails to pay credit card dues on time, a late fee of Rs 400 is charged if the outstanding amount is above Rs 500 and less than Rs 1000; Rs 750 is levied if the due amount is between Rs 1,000 and Rs 10,000. For outstanding amounts between Rs 10,000 and Rs 25,000, a fine of Rs 950 is charged; for outstanding amounts between Rs 25,000 and Rs 50,000, a fine of Rs 1100 is levied; and a fine of Rs 1,300 is charged for outstanding amounts more than Rs 50,000.

The fee will be charged on every payment cycle until the entire outstanding amount is paid. Along with the late fees, the bank can also charge penal interest, only on that particular outstanding amount and not on the entire principal amount.

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