Cut Your Credit Debt: Avoid Late Fees

5
Jan

Cut Your Credit Debt: Avoid Late Fees

Late fees on credit card bills are insidious for a couple of reasons: first, they add to the total amount you have to fork over to the credit card company, which means you get to keep less of the money you earn. And second, late payments look bad on a credit report and can sap your credit score.

When you apply for new lines of credit (including a home mortgage or a car loan), a weaker credit score will translate to higher interest rates, meaning that the cost of borrowing money will be higher.

So what can you do to make sure you don’t have to deal with the negative effects that late fees have on your finances in the present and the future? Follow these steps and you can cut your credit debt every pay cycle.

Avoiding Late Fees to Lower Debt

Don’t wait to pay. It may be tempting to put off the payment of a bill until its due date, but we all know that putting a bill aside when it arrives is the best way to forget about it. Even if you have the best intentions for paying bills in the future, it’s just too easy to lose or forget about your bills. Start the habit of paying bills as soon as they arrive. If this means you have to clip a book of stamps to the front door, so be it.
Go digital with payments. Online payments come with a number of bonuses: first, you don’t have to worry about tracking down your checkbook or a stamp when a bill comes due. Second, you have the option of enrolling in automatic monthly payments, which let you think about other things while resting assured that your bills are being covered. Online payments also lend themselves to easier organization and tracking, which can help you deal with any budgeting questions you might have down the road.
Get a reminder (or two). You can set up monthly emails or text messages from your credit card companies (and other bill-senders) to make sure that you don’t forget your deadlines each month. Better yet, sign up to receive these reminders and add some of your own to a digital calendar or personal planner so that you have almost zero chance of forgetting to make a payment.

Credit & Bankruptcy

While it’s true that foreclosure and bankruptcy are among the most damaging financial events to a person’s credit rating, most sources agree that paying bills late comes shortly behind those two. The good side of this is that, if you’re recovering from a recent bankruptcy, one of the best things you can do to rebuild your credit is to pay your bills on time every month.

Credit Report Guide