An Easy Way To Avoid Credit Card Late Fees
A few years back my husband and I were
burdened by credit card debt. The one thing that compounded
the problem was late fees. In some cases our balance
was doubled by additional late fees. We had so many
cards that we could not keep track of what was due
when. The physical act of having to write a check
for all the bills was so stressful that we tended
to put it off which only made the problem worse. Then
I discovered a useful tool:
Automatic Bill Pay Service
Management of your credit cards is essential
in order to maintain a good credit rating. One way
to avoid late fees is to use automatic bill paying.
Using this simple tool can get you back on track and
avoid costly late fees.
Many banks today offer bill pay service
for customers who access their bank accounts online.
Some offer this service free if you have more than
one account or sign up for other services. If you
use Quicken to manage your bank accounts it also has
bill pay built into it and will automatically send
instructions to your bank for each online payment
you have.
When you take advantage of these useful
tools the bank sends a check or Electronic Funds Payment
(EFT) to make the payment for you. You can schedule
one payment or a series of payments to recur every
month. Be sure to schedule payments at least a week
before the due date for each credit card you have
and keep your grace period in mind so that the least
amount of interest accrues.
Now I just schedule the amounts and
dates into my online bill pay program. My bills get
paid on time and I don't even have to pay the postage!
Want to lower your interest rate?
Ask your credit card company for a rate
reduction.
Many of us receive credit card offers
in the mail asking to transfer our balance. These
offers often come with an incentive such as 0% interest
for the first few months or a lower APR.
Ask and You Will Receive.
If you ask your current credit card
company they will often reduce your APR immediately,
but you have to ask. Remember, they want to keep you
as a customer so it is to their advantage to reduce
your rate instead of you taking your account elsewhere.
Credit card representatives are authorized to reduce
your rate within certain parameters. If you did this
with all your credit cards the savings could be substantial.
Negotiate your credit card balance.
One way to reduce your credit card debt
is to negotiate with the credit card company to reduce
your balance and pay off the card. If you've taken
out a home equity loan or sold your house recently
you probably have some cash on hand. Use this to pay
off those credit cards. But there are some things
you need to be aware off:
1. The difference between the balance
and the reduced negotiated amount is reported as 1099
income by the credit card companies. So you'll have
to pay income tax on the forgiven amount.
2. It will create a negative item on
your credit score.
Use this tactic very carefully and consult
with your financial advisor or attorney.
Using any or all of these strategies
can go a long way toward managing your credit cards.
The important thing is to be consistent and don't have
more cards in your wallet than you can manage properly.
Karen Morrison is the webmaster of http://www.mycreditindex.com which offers information about
obtaining credit and managing debt.
