The last thing any of us need in this economy is late fees. But when you’re living paycheck to paycheck and juggling bills’ due dates, these painful penalties may feel unavoidable. Worse, they can cost you double:
“Not only do they add to your debt, but if you’re late enough, they can increase your credit-card interest rates because you appear to be a bigger risk,” said Maxine Sweet, vice president of public education for credit-reporting company Experian North America.
Follow these smart strategies from Good Housekeeping to minimize or even eliminate late fees.
Understand your deadlines
If your mortgage statement says payments are due on the first of the month, but late fees are charged only after the 15th, don’t assume mid-month is your real deadline.
Read the fine print on the back of a bill and call to confirm that you understand. Make sure that the company won’t report your payment as late even if the late fee hasn’t kicked in.
To keep track of deadlines, write the bill’s due date on the envelope you got it in and stack your bills in due-date order, or write the dates on a calendar in red.
Smart tip: Sign up for a service like Quicken Online (quicken.intuit.com) or Google’s calendar feature, which will send you free bill-due reminders via email or text message.
Spread out your due dates
If, say, six out of your seven monthly bills are due on the 10th and payday is on the 15th, take control of the situation and change the dates on a few of them. You’ll avoid running short of cash and triggering late fees.
Another idea: Ask your mortgage lender to convert your loan to one with biweekly payments, so you won’t be socked with a huge, account-draining bill every month.
While doing so usually triggers a fee, and it increases the amount you’ll pay throughout the year, you’ll get the extra benefit of paying less interest throughout the loan’s life.
For instance, with a biweekly plan, you’ll save about $17,000 in interest over the life of a 30-year, $100,000 loan at 5 percent.
Smart tip: Falling short just this month? Ask for a one-time extension. Say “Unfortunately, I can’t pay my entire balance this month. May I pay $200 now and the rest in two weeks, without a charge, since I have a good credit history with you?”
Pay online or by phone
If you’re still racking up late fees, know this: You can also send cash electronically at the last possible moment.
Set up online payments on a recurring or one-time basis through the billing company’s website or pay by phone with an automated system.
Smart tip: Payments may take a few days to process and, if posted after a certain time of day, may not be credited until the next day. Thus in some circumstances, a bill that’s paid near the deadline could end up being considered late.
