How to Avoid Credit Card Late Fees

Did you slip up and pay your credit card bill a little bit late? Get ready for some serious penalties.

Late fees and penalty interest rates, which many issuers apply to your account after a single late payment, are climbing higher and higher.

From 1995 to 2007, the average credit card late fee more than doubled from $13 to $28, according to a survey by Consumer-Action, a non-profit education and advocacy organization based in San Francisco.

With some issuers charging credit card late fees as high as $39 and penalty interest rates as high as 32 percent, it’s never been more expensive to pay late with a credit card.

So do your wallet a favor and get in the habit of paying your credit card bills on time every time. These tips will show you how.

Pay online. Sign up for online account access for your credit cards and pay your bills online. It’s free and it’s easy. To enroll, you’ll need to share your checking account number and routing number for your bank with your credit card company. (The routing number for your bank is listed on the bottom of your check.) Once you do, you’ll be able to pay your card bills in a matter of seconds. When you pay online, the payment is often posted to your account the very same day. There are no checks to write or mail. Paying online is the quickest way to pay your credit card bill.

Sign up for online alerts. Need a little help keeping track of the due dates for all of your credit card bills? Use online alerts. With an online alert, a credit card issuer will send you an email reminding you that your payment due date is coming up.

Pay your bill as soon as it arrives in the mail. Still paying your credit card by sending a check through the mail? Get in the habit of paying your bill on the very day it arrives in your mailbox. Don’t delay. Just write your check and be done with it. Paying immediately, even if it’s only the minimum payment, is a great way to guard against late fees — especially when your payment needs to travel through the mail.

Follow all payment guidelines. When you send your credit card payment through the mail, everything needs to be just so. The Fair Credit Billing Act requires issuers to credit your payments the day they are received, but each credit card company is allowed to set specific payment guidelines. (You’ll find these guidelines on the back of your credit card bill.) If any of these guidelines aren’t met, your credit card company could take up to five days to credit your payment. Don’t let a small payment detail trip up your on-time payment. Use the pre-printed envelope provided by your credit card company. Be sure to include your account number on the check and remember to sign it. And don’t forget to include the billing coupon provided by your card company, apply proper postage, and mail your payment to the proper billing address.

Pay by phone. Many credit card companies charge a fee, ranging from $3 to $15, if you pay by phone, but this is still less than a typical late fee. Some banks only charge a fee if you pay by phone using funds from another bank. So if your bank issues your credit card, paying by phone may be a free service. Be sure to ask. To pay by phone, you’ll need to call the customer service number on the back of your credit card and request to pay your bill by phone. You’ll be asked for a checking account number, a routing number for your bank, your credit card account number, and the amount you’d like to pay. That’s it. It’s that easy.

Move your due date. Is your credit card bill due at a time of the month when you tend to be a little low on cash? Why not move your due date to a better date? How about a day or two after payday, when your account will have more cash? Pick a day that works for you and stick with it.

Consolidate your balances. Rather than pay two, three, four or even more credit card bills per month, why not consolidate your balances to a single card? Remembering to pay one credit card bill per month is a lot easier than remembering to pay three or four. Watch out for balance transfer fees. Many issuers charge as much as 3 percent of each balance you transfer. You may be able to get this fee waived simply by asking, so be sure to ask. Also be sure to continue making the minimum payments on all your cards while you await the completion of the balance transfer.

Automate your payments. Sign up for automatic payments with your credit card company. Many issuers offer this option when you enroll in online account access. Some issuers let you pick the payment amount that you’d like to pay each month. Others only give you the choice of making the minimum payment or the payment in full each month. Choose whichever option works best for your budget. Don’t forget to write the payment amount in your check register. And of course make sure there’s enough money in your checking account to make the payment. Pick a due date and payment amount that works best for you.

Know your cards. When it comes to credit cards, ignorance can be costly. So get to know your credit cards. Gather up all your cards and make note of each card’s annual percentage rate, balance, billing cycle, minimum payment, and due date. Now take a good look at the list. What would be the simplest way for you to pay your card bills each month? Consolidating balances? Coordinating due dates? Paying online? Automating your payment? Pick the payment strategy that works best for you and do it.

Call your issuer as soon as you’re late. Mistakes happen to everyone. Let’s say you slip up and forget about a credit card payment until after its due date. Pay by phone or online as soon as you discover the mistake. If it’s your first late payment, you may be able to get the late fee and penalty interest rate waived, simply by calling and asking. So pick up the phone and call your card company. Remind the customer service representative that you’ve been a good customer with a good payment history and then request that any late payment penalties be waived.

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