Self-discipline and these four techniques can keep you in the black on credit card payments
If you've ever been late on a credit card payment, you know how damaging the consequences can be. You're charged a late fee likely somewhere in the range of $27-$37 and your credit score may also be damaged.
Although you can avoid such problems by using cash or debit exclusively, you will miss out on opportunities to build your credit and receive certain rewards and perks—not to mention the fact that credit cards are more secure than debit cards.
Many people have found that the better option is to use credit cards and figure out a method of paying them off either early or on time. This way, you'll be building credit and leveraging it for perks and rewards without having to think about late fees, rising interest rates, or drops in your credit scores.
This often means simply getting yourself organized and automating your payments. Below are four methods you can use to make sure you'll never make a late payment again.
- Set Up Auto-Pay
- Pay Your Card Off Several Times Per Month
- Change Your Due Date
- Sign Up to Get Payment Alerts
Setting up automatic payments is a smart idea for everyone, especially for those who have trouble remembering their payment due date. You can set it up through your financial institution, though most credit card companies also offer this option.
If you choose the latter, you can decide when and how much to pay. For instance, you can decide to have your checking account debited on your due date or on another date before that. You can also decide whether to pay off the balance in total, pay a fixed amount, or make only the minimum payment.
There are great advantages to automatic payments. You don't have to worry about remembering to pay it, so you should never have to pay any late fees and have a late payment appear on your credit reports.
However, there are also disadvantages. You have to have the money in your account to cover your payments, or you'll see a fee for insufficient funds from your bank, a late fee from the credit card company, and possibly another fee for a payment not going through from your credit card. It can also lull you into not checking your bill each month for fraudulent charges and increasing debt.
Are you good at remembering that you need to pay off your credit card but bad at remembering the actual due date? It will help you to pay off your card several times each month. Some people find it easier to get into the habit of paying their bill every time they make a purchase with it, or paying it once per week, or anytime they think about it instead of waiting for one date at the end of the billing period.
You can now pay your bill anytime and anywhere thanks to the Internet and mobile bill pay. Paying off your balance every time you have the chance—whether it's due or not—enables you to avoid late payments altogether. It also helps you stay on budget since it makes you constantly aware of what your balance is.
The downside comes if and when you get too busy and forget. It is a good idea to set up your account to make the minimum payment automatically just in case, then log in and pay the balance in full every time you get the chance.
If you have several credit cards with different due dates, it can be hard to keep yourself organized enough to pay each balance off on time. Most credit card companies will change your due date to any date that you choose; all you have to do is ask.
This method can be useful if you have other major bills you can't afford to forget. For instance, if your rent or mortgage payment is due on the 28th of each month, you could change your credit card due date to the 28th and pay them at the same time.
Changing your due date will make you more likely to remember to pay if it's due on the same date as other bills. The disadvantage is that you have to make sure to have enough money to cover several payments at one time, which may be difficult if you're living paycheck to paycheck.
If you need a reminder about your credit card bill, think about signing up for payment alerts. Your bank can provide automatic alerts through text or email on certain dates or when your payment is almost due.
This can help those of us who are financially responsible but forgetful. However, this can only take you so far; you do still have to log into your account and pay the bill. It might be wise to also set your account to make a minimum monthly payment too; that way, you'll be covered either way.