Monday, September 10, 2007

Stop Paying Late Fees

In my final guest post is from editor Linda Burros of She has written a great post on "stopping paying late fees."

Stop Paying Late Fees

Late fees are a pain for credit card holders, but they’re big business for the credit card companies!

Your credit card company won’t tell you if it’s strategically mailing out bills late in the billing cycle to maximize the number of late payment charges – but it’s a common tactic. You really need to act upon the bills right away (if you’re mailing in your payment) to ensure it’s in on time. The law requires credit card companies to send the bill out at least 14 days before your payment is due – but count up the three days for it to get to you and the three to five days for the payment to arrive, you may only have one week’s wiggle room.

Although the Fair Credit Billing Act requires lenders to credit payments as soon as they come in, each issuer is able to set its own guidelines for payment, and if you don’t follow these guidelines to a T it could take an additional five days for payment to be credited.

For example: your credit card company may require your payment to arrive in the preprinted envelope included with your bill. Make sure you read all the policies stated on the back of your credit card bill and follow them exactly.

Alternatives to Mail-In Payments

Or you could pay online or by telephone. Many online and telephone banking packages are very inexpensive and when you eliminate the cost of sending out paper checks, they’re practically free. Although your payments online are usually processed the same day, you still want to make payments a few days before the due date, just to be sure.

Automatic withdrawals from your checking account are great if you’re forgetful to pay online, but beware that you have money in the bank at the right time or you could get hit with an overdraft fee. You also don’t want to make JUST the minimum payments unless you want to pay INTEREST through the nose, so automatic payments are a bit trickier as you may not
be able to forecast your bill amount and how much you can afford to pay – much more difficult to “set it and forget it.”

Perhaps your due date falls at a time of the month when you’re typically cash-strapped. You can also call and arrange with your credit issuer for a different date.

Double “Check” your Checks

This may sound silly, but like your teacher used to say “always double check your work.” Sending a check without signing, or writing the wrong amount can make your check useless, even if it made it on time. Write legibly, and avoid writing memos on the check like “I’m making an extra payment” as this can cause the check to circulate from department to department further delaying its clearance. Oh, and make sure if you’re using your own envelope that you use the correct address!

Reversing the Late Fee

Many late fees go unnoticed by credit card holders who rarely double check their statements. If you’ve been charged a late fee, you can contest it if you call your credit card lender and ask them to waive your charge. They’ll most likely honor your request provided you’re not habitually late. If you’re consistently sending out payments on time and still
frequently get dinged with late fees, (you suspect your credit card company’s not being honest) you can protect yourself by sending your statement with a return receipt or certified mail to prove you are sending your payments at least ten days before they’re due.

Linda Bustos is an Editor for CreditorWeb, where you can learn about personal finance and credit cards.

1 comment:

Mrs. Micah said...

My dad works for a CC company. At one point, all exempt employees had to take customer service calls for 3 hrs per month.

He said calling abt fees is always worth it. Unless you have a bad history with them, they'll almost always waive it. At least, that was what his company told him to do.