Last month, I made a dumb mistake. I forgot to stay on top of my bills and my combination cable and cell phone bill — one of our largest household bills, as you might guess — was left unpaid for nearly two months. I was just being disorganized but from the billers' perspective, I was close to crossing the line to being an errant customer. I got a letter. I even got a text message on my cell (after I’d paid the bill, in fact).
Timing is Everything
Service companies are serious about getting their money on time. Their business model depends on getting that regular cash flow - and they’re always on the hunt for bad customers who don’t pay their bills. That’s why these companies will ding you with late payment fees, interest and start bugging you, even send you to a collection agency, if you don’t get on top of things.
If You Pay Late
On the surface, the biggest problem with paying your bills late is you can be subject to various charges put in place by the supplier. Some bills include a late payment charge, or post two different payment due dates: one for paying early, the other if it’s late. Some bills charge a flat percentage on late charges. In particular, credit card bills post their interest rates (as much as 22%) if you pay after the due date. (The minimum payment due amount has nothing to do with interest: it just means the company won’t come after you if you pay this minimum amount. The remainder of the balance will be charged interest.) Paying late has an impact on your credit score. Every time you pay late — even by a few days — it lowers your score. That can be a problem later on when you want a loan or a mortgage. In the worst-case scenario, you get so behind on your bills your services are cut off and a collection agency will start calling. This is a stressful situation you likely want to avoid.
I’m a huge fan of online bill paying through sites like Epost. But the problem is your bills can stay hidden from you if you don’t visit the site often. Make sure if you do use an online service you set up notifications — Epost has a notification calendar. I don’t use it, but I should! As well you can set up bill payments through your banking portal - but again, they’ll remain unpaid unless you go and check online regularly. If you're a paper bill person, the key here is to be tidy. Have a place for your bills and keep them there. If a bill arrives and ends up with your spouse's things, you could have a problem. Get everyone in the family onside with the system and ideally have just one person in charge of keeping track of what's paid and what's not. Another option is to set a bill-paying day. Say, the first or 15th of the month. That’s the date you sort through all your paper or electronic bills and process them. I like writing the date I've paid a bill right on it and making notes on Epost for those bills that arrive this way. That way I have a paper trail that I can follow if there's confusion.
Keep Bills In Check
If you’re running short on a regular basis, the answer is not to not pay your bills. Instead, perhaps reassess expenses such as your cable, cell or telephone bill and see if there are services you can eliminate to lower your monthly costs. Paying late is not just stressful. It can compromise your ability to borrow in the future, plus late charges and interest can eat away at your disposable income. Best to find a system that works for you and stick to it so paying your bills becomes a painless regular routine.