Credit cards have made it possible to access cash even when you have an empty bank account. With this card, you can borrow money to finance a purchase and repay it (in full or part) at the end of the month. If you are a credit cardholder, I bet you are familiar with a credit report. A credit report consists of details about your credit history. This document has a lot of information on it, some of which you may not understand. For instance, you may not understand what the term “deferred payment” means on our credit report.
Deferred payment on your credit report means you have been given extra time to sort out your debt. This payment option is usually offered to individuals whose finances are affected by certain circumstances like a pandemic or financial hardship.
Your credit report contains some information that may seem gibberish to you. Some of us often seek the help of certain individual when trying to decipher some terms on your credit report. One of the many terms which I feel some credit cardholders often find hard to grasp is a deferred payment. It is crucial that you understand all that your credit report holds to grasp your financial situation as far as a credit card is concerned and evaluate your chances of getting a loan. If you are yet to fully grasp the idea behind a deferred payment, this article is for you.
What Can Someone Do With Your Debit Card Number?
What Does Payment Deferred Mean On Credit Report?
Things are pretty hard out there. The fact that you can afford three square meals a day, pay off your credit card bills, mortgage, including other debts comfortably is enough reason to be very happy. Many folks out there are trying to settle their credit card debts and at the same time cater to their needs and that of their families. The pandemic even made things worse. Many individuals lost their source of livelihood or had their pay reduced, thus making it difficult for them to cater to their needs and pay their credit card debt at the same time.
To lessen the burden of individuals passing through financial hardship, especially when the global pandemic crippled a lot of activities and cause millions of Americans to lose their jobs, credit card companies provided what we know as a deferral plan.
What Is a Deferment?
A deferment means that your monthly credit card payment will be skipped or postponed. It means that the lender or credit card issuer has agreed to allow you to delay payment for a specific time. Some banks will continue to accumulate interest on your credit cards. Other credit card deferment plans may lessen the interest cost or the annual APR rates, therefore saving the customer money on interest costs. The amount of help provided by a deferment plan often depends on the bank’s policies, the customer’s credit history, and the total balance that is owed, including the customer’s payment history. Each credit card issuer, be it bank of America or JP Morgan Chase, has its own type of deferral plan offered to designated customers.
In most cases, when a deferred payment plan is offered to an individual, the missed principal payments will still be owed/will still be included in the account. This simply means that the money is still owed to the credit card company; however, you are allowed to delay the payment for some time while the deferred payment plan is in place. The bank or credit card company will allow the individual, who is often someone in a financial crisis, to skip the monthly payment.
The following banks usually offer deferral plans or payment:
- American Express
- Bank of America (B of A)
- Capital One
- Chase
- Citibank
- Discover
Always have it in mind that not everyone is deemed eligible for a deferral plan. It is only meant for those in grave financial situations. Before selecting qualified individuals, banks look at some factors. Check the policy of your bank regarding a deferral plan to find out more.
Now, back to the big question. If you receive your credit card report and you see “payment deferred” on one side of the report, would you know what it means? If you don’t, then you are about to find out.
You see, the “payment deferred” you notice on your credit card report means the credit card company decided to allow you to delay your credit card payment for a certain amount of time. Since potential lenders scrutinize your credit report before offering you a loan, they should be able to see the tag, which usually shows up in the remarks field of your credit report.
The lender may decide to lend you money after seeing this information or decide against lending you money. Whatever happens, always have it in mind that deferral remarks often affect the decision of potential lenders, be it positively or negatively.
If you are going through a financial predicament, one that may affect your ability to pay your credit card bills in due time, you can contact the credit card company and inquire if they offer deferment. If they do, you could find a way to apply.
Which Card Details To Give For Payment Over the Phone?
Do Deferred Payments Affect Credit?
Deferment is often provided to those going through financial hardship, like the one experienced during the height of the coronavirus outbreak. If, for instance, you were offered a deferment, it would reflect on your credit report, a document that holds information about your credit activity, loan paying history, etc. Now, as you know, a lot of things affect your credit. Do you think a deferred payment is one of them?
A deferral won’t affect your credit. In fact, credit bureaus wouldn’t count deferred payments against you. However, once the deferral period is over, you are expected to make prompt payment; if you don’t, it will affect your credit negatively.
If your credit card issuer approves you for a deferral, it simply means that the issuer has agreed that you don’t have to make payment during that time. They won’t report payment activities during that period. Thus, missing payment won’t have a negative effect on your credit score.
