With the economy in a slow recovery, many people are still living paycheck to paycheck. Paying your bills on time can often be a struggle and late fees just throw a bigger wrench in your budget. Not only do fees make your balance larger, but for credit card accounts, a late or missed payment will often times bump your interest rate higher as well. There is a solution, here are four strategies to avoid paying another late fee.
Knowing when late fees are triggered by each of your creditors is an important step to avoiding them. Your car payment may be due on the 6th, but with a simple fact finding phone call, you may find out their policies allow a 5 day grace period before late fees are applied. When money is tight these extra five days could make all the difference.
Tip: Set-up reminders in Google Calendar or a budgeting software like Mint to email a reminder near your due date.
Switch Your Due Date
If you get paid on the 1st and 15th and five out of six of your bills are due on the 1st, you’ve got a problem. A majority of us are not disciplined enough to budget and save the funds from their mid-month paycheck to cover the deficit at the beginning of the next month. The solution is to call your creditors and switch your due date. Spread your bills out evenly between your paydays. A majority of creditors will only allow you one billing date change, so be sure to plan accordingly.
Tip: Besides just utility bills, speak with your mortgage company about switching to a bi-weekly payment. This makes a smaller mortgage payment twice a month instead of the big chunk at once. You will pay a bit more each year, but you’ll save big in interest in the long run.
Pay Online / Phone
If you don’t have your payments on auto-pay, then making one-time payments each month via telephone or internet will buy you additional time as there is no need to mail your payment early. Beware though, know your creditors online billing window. Many credit card companies have a cut-off time for payments. If you make your payment after that time it will not be applied until the next business day and may be considered late. Also, some companies require you to schedule the payment online at least 2 days before the actual payment so do your homework.
Tip: Know which of your creditors charges a phone/internet processing fee. They usually range from $1.95 – $5.00 per transaction so you should be aware of them.
Contact Your Creditor
If you have made the adjustments above and are still running a bit short this month, make a call and be honest. But be sure to call before your due date. Many companies (such as utilities, cell phone, etc.) will allow you to set a payment arrangement, granting an extension of up to 2 weeks, without adding late fees. Just be sure to make your newly scheduled payment. Otherwise they will hit you with fees and may not be as lenient the next time you’re in a bind.
Tip: If you can, paying a small amount towards the balance when setting the payment arrangement will help.