For the last 3 (THREE!) credit card statements, I have been assessed late fees. Not only does this damage my credit rating, but it's a whopping 29 bucks a pop plus finance charges (all in all each instance costs about 40 bucks). The first one was admittedly my fault. I just forgot. But the past two I have made a concerted effort to get them in on time. I mailed checks out at least 3 days in advance of the due date. Is that not enough? Do I need to FedEx them from now on? I've been sending them in at about the same time I have always done so, but I am thinking maybe they have changed the way they process incoming mail, and that could be the reason all of a sudden I am getting tagged with these fees. How early do you guys send that stuff in? I am always stretching my money as far as it can go, otherwise I would send it off the day I get it. Also, does anybody know how much late payments affect your overall credit report? They refunded me the last one, but does that mean it's stricken from my record as well? I emailed them again about this one...we'll see if they do the same. "Did you know that if you mix frozen orange juice concentrate with gasoline you can make napalm? One can make all sorts of explosives using simple household items." "Really?" "If one were so inclined."
Credit companies suck and so do the reporting companies. I have had so many problems with those damn things. Help us Tyler Durden, you are our only hope.
My fiancee and I are in the process of buying a condo so we've spent some time talking to various loan officers about obtaining mortgages. I asked a couple of the officers about the whole late payment issue and I was told that as long as your payment is not more than 30 days late it won't show up on your credit report. They CC companies will still gouge you by charging the $29 but it won't hurt yout credit. As for how to avoid the charges, a couple of suggestions. Give the CC companies a call. If you tell them you mailed the payment in ahead of time they should at least only charge you $15 or so rather than the full penalty. I did this a couple of times and got the fee reduced or eliminated without too much difficulty. As for how to avoid this completely, just go with internet banking. I am sure that every CC company now allows you to pay your bills online. I haven't mailed in a credit card payment in probably 15 months. You can pick the exact day you want the payment made so you can ensure you get all the interest you can. I highly recommend it.
Dylan is right. They typically don't report you for being a few days late. Why bother? All it is is more work for them, and it creates ill will with their customer base. They're much more happy to just hit you up with the late fee which might effectively double the already high interest rate you are paying.
I am doing this all from memory, so forgive me if it contains any incorrect information. I know a little bit about this. I believe dylan is partially right. Part of your credit report reflects delays only when they go past 30 days; however, that doesn't mean you can wait 20 days past the due date each month to pay without suffering the consequences. A string of numbers follows each account on your report. It might look like this: AMER EXPRESS 1114211 The numbers are used to represent when payment was made. A 1 means that the account was paid on time; a 2 might mean payment was received 30 days late; a 4 might mean a payment was at least 90 days late. If you are consistently late but pay within 30 days, this numeric string will not change. Your credit report also includes a description of sorts for each of your accounts. For mine (I just checked in this past weekend), each of the accounts was marked "Pays As Agreed", meaning I pay on or before the due date each mont. Now, I do not know for sure, but I am pretty confident that if you pay late on a regular basis, that description will change-- and any lender who accesses your credit report will see that on some accounts, you're not consistently paying per the terms of your loan. Additionally, I don't think anyone outside the credit bureaus really knows how the Beacon or FICO score is generated. It doesn't seem like payments that are four or five days late would affect it, but I would not make that kind of assumption with something as important as my credit rating if I were you. Dylan's advice is excellent. Some credit card companies will allow you to notify them a payment is being made; this is considered as good as an actual payment for a specific grace period (depends on the company). With the American Express charge card (not a credit card) I used to have, I could call them on the day the payment was due, say I'd mailed it, and have something like two more weeks to get a payment to them with no penalty. Pretty sweet-- I got up to six weeks of an interest-free loan from them. My advice to you would be twofold: 1) You're just going to have to suck it up and mail your payment earlier. That's no fun but think of it this way: when you're late and you're charged $29, what percentage of the payment you're mailing is that? Let's say you're sending the minimum payment, and it's $30. If you're late, you've just paid a 100 percent premium for the right to hold on to that $30 for a couple more days. That is really, really not worth it. Even if the payment is $200, that's still a 15% premium. Not good. If the amount you're sending is so much that you're risking bouncing a check or overdrawing your account, do whatever you have to do to get overdraft protection on your checking account. Believe me, the costs of overdraft are much cheaper than what credit card penalties cost you. (It makes sense to have overdraft anyway). That paragraph ties nicely into my other point: 2) If your finances are so tight that the exact day you mail your credit card payment affects them-- if holding on to that money for a couple days really makes that big a difference-- you probably need to reassess your finances. That could indicate a lot of things: you're carrying too much credit card debt (so that the minimum payment eats up too much of your disposable income), or you're spending too much in other areas and not leaving yourself enough to comfortably meet your obligations. I hope this helps. I have been there and it's no fun. I will post some more information (no, really, there is more than I managed to include in this diatribe) this evening on FICO scores if anyone's interested.
If you don't already, then I recommend you use online banking and bill pay to pay all your bills. It's so pathetically easy that paying bills is no longer anywhere even close to the burden it once was. As for your question about is 3 days enough, I would say "no". My bank requires a 5 day lead time for non-electronic bill payments(i.e. mail check). 3 days before a due date is really pushing your luck. Thing is...if your doing online bill pay, then most companies are set up for electronic transactions which require only a 2 day lead time. Online bill pay is as easy as logging in, filling in an amount and date next to your payee, and submitting your payments. One minute tops. I used to buy stamps/envelopes, write the checks, and address the envelope which took forever in retrospect(major pain). Online bill pay allows you to pick any date you want to make your payment. You can receive your bill(where they also have electronic bills doing away with the mailed version in some cases) and make your payment now or for a future date. If your bank doesn't have online checking and bill payment, then I recommend you find one that does. Paying bills has never been so easy and I'm never late on my payments. And my bill paying satisfaction is at an all time high .
Keep track of when that bill comes in a pay it accordingly with one of your paydays. I even send payment a few days before my paycheck is auto deposited on that Thursday nite. Remember, you are being charged interest even as your balance just sits there. So get that bill out of the stack of other bills and get rid of it ASAP!!!!!!!!! BTW:Credit cards can burn in eternal hell for all I care.
That's what I've done mr_oily. I've started separating my bills by paycheck, and that way, I'm never late on any of them.
Surfguy made a lot of good points. With my bill pay service, they suggest making the payment 5 days in advance. If I do that and the payment is late for any reason, the bank pays any penalties and straightens things out. It has only happened once to me since I used bill pay and that was in the first month I used it. The bank took care of everything as it was admittedly their mistake. The thing to remember about bill pay, hwoever, is that you can't 'float' a check. For instance when you mail a check you may have a week before the money actually comes out of your account. With bill pay, the money is gone the day the paymentis sent. Most credit cards nowadays do not have a grace period. If it is one day late, they charge a fee AND generally increase your interest rate. The first time you have a late fee, you ought to call the company (a moot point for you now) and request they waive it. Tell them the truth. With the competition the way it is, they generally do. Many credit card companies also offer you the opportunity to pay your bill online without the need for a bill pay service. This is even better because it's free and the money is directly withdrawn from your account, meaning you can make the payment the day that it is due and not have any money removed from your account until that day.
Go with either the online bill pay service through your bank(assuming it has one) or your credit card company's online bill pay service(once again assuming it has one). I pay all of my credit cards online as well as my phone and satellite bill. I even pay my ISP bill by phone so that I only have to mail in one bill every month! The online services are great. You can track your balances, make sure your payments are made on time, contact customer service(although I recommend speaking to someone because action is taken faster) and do things such as balance transfers. I'll never pay a credit card by mail again.
Surf, I have been considering this, which bank do you use? It sounds good, but I have been hesitant to do it. DD
Currently, I use Bank of America. They used to have Managing Your Money software that used dial-up to dial in to a central banking computer to retrieve posted transactions and schedule payments. That wasn't as good as their online checking and payment system now. I think it's $5.95 a month for the online bill payment. I've never had a problem with the software or the online systems. The only problem I ever had was the payee not cashing the check as I believe they expire in 30 days. The only downer is it's not free but it's so damn convenient. I don't think Bank of America is the greatest institution to do business with. They have those damn ATM fees which I think they charge you and the bank ATM your using charges you(only if you don't use the BoA ATMs). I believe their also charging me monthly service fees for my checking account. I was seriously contemplating switching over to USAA Federal Savings Bank. I think they still charge about $6 a month for online bill payments but they they pay you for the ATM fees so you can use any ATM and not have to pay those blasted bank ATM fees(i.e. free ATM withdrawals). Also, they don't have those monthly account service fees. The only thing about USAA which may or may not be bad is you do all your business through the mail if you want to make deposits. No big whoop really. Most people have direct deposit so that isn't that often. They have excellent customer service. I've just been lazy to switch over. Thing is the fees I pay for Bank of America come close to negating any interest I make in my savings account . I just see it as a hassle to switch over so I haven't done it yet(i.e. set up all new payees, modify direct deposit stuff, close out the old account, etc.)...but I want to and will eventually. I think USAA may have the best deal going. They were offering $50 for anyone opening a checking account with a minimum deposit amount...not sure if their still doing that. Online banking and bill pay will ease your daily burdens. I just accumulate my bills and make my online payments in about a minute...that's it for the month. I think the $5.95 is worth it because of the time savings and savings on stamps. Surf
I also use Bank of America, but my account is linked to a money market account my parents have with them(so they can access my account in case of an emergency) and I don't have to pay any monthly service fees. Also the checking option I have allows for me to make 3 ATM withdrawls without being charged by B of A(still have to pay the other ATM fee though). If you want to avoid paying a monthly fee to do online bill payment, most major credit card companies will do it for free.
I am with BoA too, and the biggest reason I don't do the online stuff is that they charge you for something that is EASIER for them to handle. Electronic banking is a no load cost for them, there are no checks to handle and it goes through instantly. It is insane that they charge for that service... ARGH !! DaDakota
I'm with Bank One, and they charge five bucks a month for the service. I've been threatening to start using it, but I haven't yet. But you guys have convinced me. I'm going to start today. As for DaDakota's sentiments, I agree...they should be happy that customers are using this, and I would imagine that competition will drive the prices down to free or next to it as the service becomes more popular. But right now, it's new, and they can get away with it. As for my wife and I...two vehicle payments, two mortgages, student loans, credit cards, and all the utilities....we easily have over 15 bills a month, so we pay more than five bucks a month in stamps.
