Avoiding Late Payment Fees

Not everyone can make every payment on time, every time. Unfortunately, when a payment is late, or even missed, it’s a catch-22 situation. You missed the payment because you couldn’t afford to pay it, yet the next month you need to pay twice your payment plus a late fee. While you can’t do much about a double payment situation, there are things you can do to avoid late fees.

The most obvious way to avoid a late fee is to simply pay your bill. While it’s not always possible, paying your bill on time eliminates late fees and keeps your credit in good shape.

Some people might incur late fees simply because they didn’t know about their credit card company’s payment policy. Make sure to check the back of your credit card bill to see when the company’s policies are. See if they consider a payment late based on what time of day the payment is received. Companies might also dictate that a payment be sent to a specific address, or that it be contained in their specific envelope. The Fair Credit Billing Act stipulates that the credit card company must credit your payment the day it’s received. However, if your payment doesn’t conform to their guidelines, they can delay crediting your account by as much as five days. This can turn your timely payment into a late payment.

Another method to avoid late fees is to simply skip the payment. Before doing so, however, see if the credit card company has a program that allows you to skip a payment. Some loans, especially auto loans and subprime mortgage loans, will advertise their payment skipping promotions to current customers, normally around the holiday season. Again, be sure to scrutinize the fine print and make sure that if you take advantage of such a promotion, you won’t be charged any kind of fee.

Many people like to pay extra on their bills to try to eliminate them faster. A sure way to avoid late fees is to pay your minimum payment as soon as you receive the bill, even if you are willing and able to pay extra. Sometimes people forget to pay their bill while waiting for the money to come in for that more-than-the-minimum payment. Pay the minimum amount when you get the bill, then pay the extra at a later date. There will be no late fee since you already paid the minimum on time.

One little-used option people have is to change your due date. You might be in a situation where you have more cash at a particular time of the month, such as your paycheck day. Call your credit card company to see if they will allow you to change the due date during that time.

If you are uncomfortably close to your due date, see if your credit card company allows payment over the telephone. Normally, the customer service representative will “image” a check based on your account numbers. When you call, make sure you have a check handy so you can give them your account information. They will usually only need the routing/ABA number, located at the bottom left of your check, and your account number, which is the second set of numbers at the bottom. They might also ask for a check number to ensure you don’t duplicate a check you already used. Beware, however, that you might be charged a fee for this convenience.

Some companies offer other express payment methods. Instead of paying by phone, you might be able to pay online, which usually doesn’t involve a fee. As well, you might be able to send your payment via an overnight delivery carrier such as UPS, or you can use a wire transfer service such as Western Union. Fees might be associated with these methods, but often they’re less than a late fee. If using an overnight delivery service, make sure you get the correct payment address. Some companies have a separate address to send such a payment.

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