Avoiding Late Payments on Your Credit Card
A credit card is a useful financial tool when used responsibly. Credit cards offer many benefits – cash flow management, rewards points and extended warranties, to name a few. An easy way to turn your credit card from a financial tool into a financial burden is by paying your credit payments late.
Your life is hectic enough as it is – between picking up your kids from school and doing the laundry, it can be easy to let paying your credit card payment slip your mind. Paying your balance late is a costly mistake best to be avoided. Let’s take a look at some simple ways to avoid this unfortunate situation all together.
The High Cost of Paying Your Balance Late
Have you ever wondered what would happen if you didn’t pay your balance on time? If you fail to pay your credit card by the due date, you will be charged interest from the transaction date until the balance owing is fully paid. Not only will you lose your interest-free grace period (typically 21 days after your statement date), you may face other penalties, including a higher interest rate, a lower credit limit, or in some cases, the cancellation of your credit card.
Furthermore, a late payment can hurt your payment history – and the longer the payment remains “late” the worse it gets for your credit. All of these unintended consequences could have been avoided if you just made your credit card payment on time.
Automate Your Payments
The easiest way to take the stress out of remembering to pay your credit card bill on time is by setting up automatic payments with your bank. With automatic payments, you won’t have to worry about the cheque getting lost in the mail – like clockwork your credit card payment will be withdraw from your bank account at the same time every month (provided you have sufficient funds).
Setting up automatic payments is usually as easy as logging into your bank account online and selecting “bill payments.” Even though your payments are automatic, it’s still a good idea to review your statement on a monthly basis before your payment date to ensure there are no erroneous or fraudulent charges.
Creating Payment Reminders
If paying your credit card balance by the due date has slipped your mind before, why not create a reminder to make payment on time? If your credit card balance fluctuates on a monthly basis, you may actually prefer paying the balance yourself rather than automating your payment.
With reminders, your credit card issuer will send you an alert or notification by email so you won’t miss the payment date. Reminders are flexible – for example, you may be able to create a reminder when your statement is available and seven days before your payment is due.
Understanding Interest Charges and Fees
If you’ve been late before, you know how costly and frustrating it can be. Many learn the hard way, but if you familiarize yourself with the costs associated with being late before it happens, you might be more likely to stay on top of your bills. Your credit card costs are spelled out in the legally-mandated “information box” on credit card applications; you can also find the cost information online or by calling your credit card issuer.
As you can see, paying your credit card balance late can create all sorts of headaches. By automating your payment or setting up convenient reminders online, you won’t have to worry about paying your credit card bill late ever again. Most important of all, you’ll keep your account in good standing and avoid damaging your credit score.