Top 5 Reasons to Avoid Paying Your Bills Late

We've all been there.  Some months you might find yourself facing unexpected expenses, and then you're left short on funds to pay your regular bills.  But if you routinely skip out on making your payments on time, you’ll find yourself in a downward slide.  Here's why:

1. Late fees – This may not seem like a big deterrent to missing your payments, but late fees can add up, especially if you routinely pay your bills late.  And on mortgage or credit card payments, they can really take a dent out of your pocketbook.  Think about it: do you really want to shell out more money to your creditors than you have to?  We didn’t think so.  Paying on time ultimately saves you money.


2. Service termination – If you get far enough behind in payments, you’ll ultimately get your services cut, or your line of credit will be suspended.  It’s less painful to have your cable turned off than, say, a necessity such as electricity or gas – but either way, it’s best to keep all accounts current, especially the necessities. To reinstate utilities, for example, may cost you a service fee.  And your creditors usually want you to pay the outstanding balance before reinstating your services or credit.  Keeping up on your monthly payments saves you from digging deeper into debt.


3. Damage to your credit – With credit cards, auto loans, mortgages and other revolving debt, you risk damaging your credit scores.  If you’re 30 days or more late on a payment, it will be reflected on your credit report and can cause serious damage to your credit scores.   If you have a bad track record with paying your utilities, providers may require a deposit or a letter of guarantee that someone else can pay the bills when you don’t.  You may also get less favorable terms.


4. Collection call hassles – Your creditors will eventually contact you for the money, even if you’re less than 30 days late.  They will likely call you daily, if not multiple times daily.


5. General stress – Sometimes one missed payment can cause a domino effect.  The more missed payments begin to accrue, the more difficult it is to dig out.  Dodging collection calls, having your services or credit terminated, damaging your credit – all of it can affect your quality of life and peace of mind.

So there you have it.  Sometimes circumstances can prevent you from paying your bills on time.  If you anticipate a bump in the road ahead, you may be better able to come up with a solution, and put a contingency plan for future “bumps.”

But if you begin to fall behind on your payments regularly, you need to examine your finances, cut back on your expenses (especially non-necessities), set up a budget, and of course, find solutions.  This includes working with your creditors on repayment options, and possibly enrolling in a debt management program through a non-profit, accredited consumer credit counseling service.