A guide to avoiding late payments
It’s important to know if you are late with a credit card payment, that it could have adverse effects on your credit rating. Although being late with a payment is a mistake that we can all make, it’s not viewed positively. Below are some pointers on how to avoid late payments and how to recover from it should you spot one on your credit file.
1. Make use of automatic payments
The safest way to avoid the issue of missing a payment is to enrol in auto-pay. This is a direct debit where you authorise the credit card issuer to automatically deduct payments from your bank account on a particular date. Enrolling in automated payments is the safest way to mitigate the risk of missing a payment. You simply assign the credit card provider to debit above the minimum amount each month from your current account, which can be a lifesaver in situations where you find yourself very busy towards the end of the month. However, make sure you are paying more than the very minimum amount when you do it, as you’ll be susceptible to a higher rate of interest if you don’t. If you are somebody that possesses consistent levels of spending on a monthly basis, you might have the option with your creditor to pay the full amount off each month to avoid paying any interest. If this isn’t an option, some credit card issuers may allow you to set a fixed amount that’s more than the minimum.
One issue with auto-pay is that you must have the sufficient cleared funds in your account for this form of payment to be effective. If you don’t, you are likely to be charged additional fees if your payment doesn’t go through. The straightforward way to ensure you have enough funds in your account is to set up the auto-pay date, a day or two after your payday. That way in theory, you’ll have enough money in your account to clear the payment each month.
2. Assign yourself reminders
With the advances of technology in the modern era, it’s easier to set reminders and online alerts through our mobile phones than having to write things down on paper. It takes minutes to schedule all of your payment due dates through your online calendar, which syncs with your mobile phone. As long as you operate a smartphone, you’ll receive reminders on-the-go, so you’ll never have to miss a payment again, wherever you are. As an extra safeguard, you should sign up to online alerts. The credit card provider will send you an email notification 5 -10 days before your payment is due. It’s always advisable to check your online balance to ensure you have enough cleared funds in your account to make the payment.
3. Make weekly payments
Despite credit card payments being due at the end of each month, this could lead to a cash flow issue for some of us. If you use your card consistently each month, you might find it difficult to pay off your balance in full, whilst managing other outgoings, such as rent. This could result in a late payment or having to carry a balance on your card. Its very easy to fall into the credit card trap of “buy now pay later”, as charging items on your card with this outlook can get you into financial difficulties. If you want to avoid debt, you should only spend the money that you have today. To help you stay on course with your bills and on budget, consider making weekly payments to help with cash flow and avoid late payments or additional fees. Managing your money this way, will probably make you more conscious of your spending and force you into better budgeting habits.
4. Contact your credit card provider
In the event you miss a regular payment, the first thing you need to do is make the payment and then notify your credit card issuer. You should act quickly in order to rectify the situation. If you have been a customer of the card provider for some time, and the missed payment is out of sorts, or it’s the first time it’s happened, your card issuer may give the benefit of the doubt and waive the late payment fee. However, if it’s not the first time it’s happened, you should probably sign up for automatic payments and or stop using the cards entirely until the balance has been paid off. It’s just a matter of finding a method that works for you.