Friday, October 4, 2013

Avoiding Late Fees

One of the worst things one can do for her credit score is miss a payment because just one missed payment can stay on one's credit report for years. Everyone needs a system for monthly payments that works for her, but in my opinion, it is far less stressful to take care of them all at once than to pay each one just before its individual due date.

Paying these bill online is an easy way to avoid fees for paying over the phone and the time it takes to stand in line and pay in person. Although I pay most bills online, I am anti-automatic withdrawals from my bank account. If a fee is added (penalty fee, new additional fee, etc.) it is taken out of one's bank account automatically along with the payment, and there is a much lower chance of getting the fee waived once that has happened. Automatic withdrawals also make it easy to ignore increases in the bill. In addition, I think it's important to go through the effort of making the payment each month so that one feels more connected to that loss of money --  twelve times a year, one gets a moment to re-evaluate the necessity of that charge. The "set it and forget it" aspect of of automatic withdrawals makes it easier to ignore where that money is going.

However, that "set it and forget it" aspect does have its positive side. If one has a habit of missing payments, automatic withdrawals will help to avoid missing a deadline. But there are other ways one can remember to make her payments on time.

Some people pay all their bills on the first of the month, regardless of the payment due dates. If one gets paid on the first and fifteenth of the month, this might be the easiest option.

Likewise, if one figures out how much her bills come to each month, divides that by the number of paychecks she receives in a month, and then transfers the per-paycheck amount to a savings account, she will have the money ready at the beginning of the month to pay all her bills.

The system that works best for me is to pay each bill a little before its due date, but set up all my bill payments at the same time. A long time ago, I added a reoccurring monthly reminder to pop-up towards the end of each month reminding me to set up payments for the coming month. I use gtasks daily, so that's where my reminder is set, but one can also add it as a reoccurring event to her regular calender.

When the reminder pops up, I take a little time to sign into all of my online accounts and set a payment for the dates I would like each one to go through. Setting them up all at once is what keeps me from missing payments -- I think about them all on just one day a month, and they are ready to go for the next 30 days.

Because I schedule some of them weeks in advance, I also use gtasks to remind me when each will be pulling from my bank account. This way, when the date arrives, I can keep an eye out to make sure the money pulls from my account, letting me know everything is on track.

But as I discovered last month, one should not use the online payment option from her smartphone or tablet -- sometimes the buttons do not line up correctly, and the payment does not take. Thankfully, the reminder I had set for the date the payment was to pull acted as a fail-safe, and allowed me to realize something was wrong quickly, and catch it before there was any damage.

Whatever system works best, taking care of all the bills at the same time is the important part. It makes it nearly impossible to miss a payment if they're all grouped together.

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