Getting your credit card statement, whether in the mail or in your inbox, probably isn’t the highlight of your day. But it’s important to pay that bill on time, whether you’re paying it in full or just making the minimum payment. Not only will it help you build up a solid credit history (payment history accounts for 35% of your credit scores), but paying your bill on time means you avoid having to pay your issuer any late fees.
With everything else going on in your life, making sure that bill gets paid on time can fall to the back of your mind. To help you avoid having to pay those pesky fees, consider the tips below. They’ll show you how to make those card payments like clockwork and avoid paying even a penny in late fees (or dinging your credit scores, which we’ll talk more about later).
First, let’s address why it’s important to avoid late payments.
The Consequences of Late Payments
The worst thing about late payments on your credit cards is that you not only incur a late payment fee, but if your payment is more than 60 days late, there’s a very good chance your APR is going to jump — by a lot — because your issuer is going to impose what’s known as a penalty APR. That means your interest rate could jump as high as nearly 30%, and we don’t have to tell you what that means if you’re carrying a balance.
The good news here is that most issuers will drop the penalty rate once you’ve made six consecutive on-time payments. Still, that’s a long time to pay such a high interest rate if you’re carrying a balance.
Late Fees: The Buzzing Flies of the Credit World
If you do make a late payment, you will likely incur a late payment fee — typically around $30. It may not seem like that much money and mostly it’s just annoying, but do it often enough and it can really add up, plus it can negatively affect your relationship with your issuer. That could mean you’re less likely to be approved for a credit line increase when you need one. It could also keep you from getting a reduced interest rate at some point. Bottom line: Make your payments on time and you’ll have a better relationship with your credit card issuer, which can ultimately save you money.
Now let’s look at the ways you can avoid late payments altogether.
Automate Your Payments
Do you have a never-ending checklist of things to do? When you’re getting pulled in a lot of directions, it can be a challenge to make sure everything gets done. But remembering to pay your bill is not something you want to let fall by the wayside. To help, consider setting up automatic payments for your credit card account from your checking account. You may be able to automate the minimum monthly payment, the full amount due or another amount each month, depending on your issuer and your personal preferences. It’s a good idea to check with your issuer and/or bank for specific details.
Sign up for Email or Text Reminders
Maybe all you need is a little reminder that, yes, it’s that time again. Consider signing up for email and text alerts from your credit card issuer, if they offer this service. You’ll get an email or text when a payment due date is looming. Once you know, you can hop online, make a quick payment and then go about your day.
On that note, if you have to run to the bank every time you need to pay your bill or you have to go to the post office so you can mail your check, you’re looking at a time commitment to get your bill paid. Managing your account and paying your bills online is a fast and convenient way to pay credit card bills. You can pay bills at any time that works best for you, as well as track your transactions and spending with ease. Some issuers even have an app you can use to pay your statements you may want to consider installing on your smartphone.
Pay by Phone
Not a fan of paying online? You may also consider calling the customer service number on the back of your credit card and making a payment by phone. This is a quick and easy way to pay your statement when your due date is approaching. It may not be ideal every month, but it certainly works in a pinch.
Move Your Due Date
Is your credit card bill due at a time during the month when you are running low on cash because you haven’t been paid in a while? You may be able to do something about that. Call your issuer, explain the situation, and see if they can move your due date closer to a day when a paycheck arrives. Doing so means you’ll be more likely to have the funds to pay your credit card bill and build up a perfect payment history.
Curb Your Spending
It’s simple advice, but it can be difficult to follow: If you are worried about having enough money to pay a credit card bill on time, cut back on spending. If there are purchases you absolutely have to make, focus on putting money aside so you can pay the bill when it arrives. Bonus tip: Try to pay your new statement as soon as it arrives instead of waiting until the last moment. This way, it’s taken care of and you don’t have to stress about it.
How a Missed Payment Affects Your Credit
Even with all of these great methods, we get it: Sometimes mistakes happen and you miss the due date. But even if you have to pay the late fee after that mistake, it’s important you get your payment sent in as soon as you realize it was due. If you totally forget about a credit card bill and your payment arrives more than 30 days after it was due, this could lower your credit scores significantly.
If you’ve made late payments in the past and you’re concerned about how they’ve affected your credit scores, it’s a good idea to check your credit reports and credit scores. By checking your credit reports, which you can do for free once every 12 months by visiting AnnualCreditReport.com, you can find out what happened to your scores because of your late payment(s). It’s important to review the reports from all three of the major credit bureaus — Experian, Equifax and TransUnion — because they may each be reporting different information.
You’ll want to look over them for any errors that could be dragging down your credit scores and repair them. (You can find out how to dispute any errors on your credit reports.)
From there, you can identify what you need to work on — in this case, making sure your payment history gets back on track. Monitoring your credit scores can help you follow your progress as you build your credit. You can see two of your credit scores for free — they’re updated frequently so you can see how any adjustments you’re making are affecting you on a regular basis.
Lucy Lazarony contributed reporting. This article has been updated. It was originally published February 20, 2014.