One of the primary ways banks make money each year is through the fees they charge their customers. While some of these fees are understandable and unavoidable, like safe deposit box fees, others are totally within the control of the consumer. An example of a
controllable fee is a late payment fee. Banks like it when people pay their bills but pay late. The banking industry calls people like this “sloppy payers”. They pay their bills but incur a fee allowing the bank to make more money with little effort.

Late payment fees are bad for a number of reasons:

Late payment fees are expensive – Typical late payment fees on credit cards can now top $39. If you pay your credit card late, it’s like throwing $39 out the window.

Late payment fees can cause the interest rate on your credit card to rise – If you look at the small print on the agreement you received from your credit card company, you may notice that the credit card company has the right to raise the interest rate on your credit card if you pay as little as one day late. This could make a credit card which seemed like a good deal at 9.9% a very bad deal at 21% or more. Read the fine print and chose your cards carefully.

Late payment fees can affect your credit rating - While one or two late payments may not affect your credit rating significantly, a pattern of late payments can seriously impact your credit rating. This can affect your ability to get other credit or it could cause your other creditors to raise the rate on the loans you have with them as well.

There are things you can do to avoid paying late fees:
Get organized – When your bills arrive each month, organize them by the date order in which they need to be paid. Put all of your bills in the same place so there’s no need to search for them. Something simple like an old shoe box works well to hold your bills. You may find it helpful to write the due date on the outside of the envelope so you can see at a quick glance when the bills are due.  There are also free services like http://www.mint.com/ that connect directly with your online banking and can send you an email to remind you when your bills are due.

Use online bill payer – One of the nice features of technology is that it can help with day to day tasks. Most credit unions and banks now offer free online bill pay service. With online bill pay, all of your bills are organized electronically. You simply click the mouse on the bill in question and pay it electronically. You can control when the bill is paid and how much you want to pay. You receive an electronic confirmation that the bill has been paid. In addition, on most systems, you can set up email reminders so you get notification before your bill is due. In addition, if a bill is due at the same time each month, like an electric bill, for example, you can set up the system to pay the bill automatically so you never have to worry about it.

A little planning can go a long way in avoiding late fees. By taking these simple steps, not only will you have more money in your pocket but you’re credit rating will be higher and you’ll have piece of mind knowing that all of your bills have been paid.

If you need help setting up a bullet proof plan to take control of your finances, fill out the Debt Melt Down Form or call my office at 1-888-456-5635 for a free consultation.

Your Friend,

Robert Weinberg