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7 ways to avoid credit card late fees

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By Andrew Housser

Late fees are the most common credit card fees. Each time you miss a bill’s deadline, you will face a fee. The fee is $25 for the first late payment, and $35 for an additional late payment within six months. If you pay late twice in a row, your credit card issuer can increase the interest rate you pay.

The cure is simple: Pay on time. Yet, sometimes, that is easier said than done. Here are seven tips to set up a system to help you avoid late fees.

1. Set payment reminders. Many credit-card issuers have convenient ways to remind you that a payment is coming due. Set up online access for your credit accounts and other bills. Then arrange to have upcoming due-date reminders sent to you by email or text. Failing that, put the due date on your calendar, and set a reminder via email or smartphone when the date is near.

2. Schedule minimum payments. For accounts with online access, you usually can schedule a recurring payment. Ideally, you will pay off credit cards in full each month. But you can start by scheduling an automatic payment of the minimum amount by the due date. That way, your payment will always be on time. You then can revisit the account and set up a higher payment to pay more than the minimum, avoiding interest charges.

3. Time your payment carefully. Often, you can schedule a payment on the card issuer’s site as late as the day a payment is due. You may also be able to make a same-day payment by phone, but you might incur a fee. A telephone-payment fee is less than a late fee, though, and does not affect your credit profile. When sending electronic payments from your bank account, rather than via the card issuer’s site, be aware that you will need to schedule in a few days to allow for processing delays.

4. Adjust your billing due dates. Check the due dates of your significant bills. For instance, if you pay mortgage, rent, car payments and utilities at the start of the month, you may want to schedule the due date of your credit card payment later in the month. For some people, this is a helpful way to be able to pay in full and on time.

5. Sign up for direct deposit of your paycheck. In general, if you have the option of having paychecks deposited directly to a bank account, it is a good idea to take advantage of that option. Direct deposit ensures that your paycheck gets into your bank account on payday, even when you are out sick, on vacation or cannot make it to the bank on time. This helps to pay bills on time, with fewer worries that scheduled payments will bounce. After all, returned payments not only generate late fees. They also can cause additional bank fees for the returned payment and insufficient funds – a triple whammy.

6. Stay under the limit. The Credit CARD Act of 2009 required that consumers cannot be charged over-limit fees unless they have opted in to allow their charges to exceed their limit. This means that unless you opt in, your balance cannot go over the limit. Instead, charges that would put you over the limit will be declined. If you find that you opted in previously, you can contact your card issuer to change that status at any time. To be safe, keep balances significantly below the credit limit, and keep a close eye on the “credit available” amount.

7. Ask if a late fee can be waived. If you hardly ever have a late fee, and incur one, call your card issuer and ask if they can waive the fee. Many credit card companies and other businesses will forgive a fee for good customers. 

If you already carry credit card debt, late fees can make it even harder to get out of debt. They can harm your credit rating, and they certainly cause stress. Fortunately, these steps can help you avoid the headache of late payments.

Andrew Housser is a co-founder and CEO of Bills.com, a free one-stop online portal where consumers can educate themselves about personal finance issues and compare financial products and services. He also is co-CEO of Freedom Financial Network, LLC providing comprehensive consumer credit advocacy and debt relief services. Housser holds a Master of Business Administration degree from Stanford University and Bachelor of Arts degree from Dartmouth College.
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