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You go to the kitchen to grab some late-night cereal and mid-bowl you realize your credit card payment is due. By the time you log in and make your payment, it's a minute late. One. Minute. Late. Now you have a $40 late payment fee on your account.
Credit card late fees are costly and if you pay online, they can apply the instant your payment is past due. Though you may be able to appeal to your card company and keep your credit clean if your payment is only slightly late, it's far better to avoid late credit card payments altogether. Here are four easy tips for keeping late fees at bay.
1. Understand When Your Payment Is Due
Keeping track of due dates can be confusing, especially if you have multiple accounts to manage. Creating a master list of due dates for all your monthly bills is a great place to start. Thanks to the CARD Act of 2009, your monthly credit card payment should be due on a consistent date each month. Review your terms or check past bills to find out when your payment is due. You can ask to change your due date to simplify your bill paying—or to distribute payments between the first and last half of each month.
2. Set Up Autopay
The simplest way to avoid late fees is to set up automated payments on your accounts. Your card company will automatically pull a payment from your bank account each month on the payment date you specify. Now you can eat your late-night cereal in peace.
You can also select how much you'd like to pay automatically. If you're confident you'll always have enough money in the bank to cover a large payment—or multiple payments if you have more than one autopay account—you can choose to make a sizable monthly payment or pay the total statement balance to avoid paying interest. It may be safer, however, to set up minimum monthly payments. You can still increase the payment amount before it processes or make an additional payment later in the month, but you'll reduce the chances that an automatic payment will overdraw your account.
3. Create Payment Reminders
If you'd rather make payments manually—or you're a belt and suspenders kind of person and want reminders in addition to automatic payments—you can set up payment alerts on your credit card account. Your card company will send you reminders by email or text before your due date, on your due date and/or after your due date to help you keep track of the calendar.
4. Use a Card With No Late Fees
Making on-time payments is by far the best strategy for managing your credit card successfully. Your payment history accounts for 35% of your FICO® Score☉ , and even one 30-day late payment can haunt your credit for up to seven years. Establishing a habit of paying on time is simply good for your finances. But, if you hate a late fee or even the idea of a late fee, you can choose a credit card that never charges one.
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What to Do if You Miss a Credit Card Payment
Despite your best efforts, you may miss your due date. Maybe you lost track of the calendar or you didn't have enough money in your bank account to cover an automatic payment. Whatever the reason, your payment date may come and go without a payment being made.
Now what? Here are actions you can take.
- Make your payment ASAP. While making a payment that's a day late will typically incur a late fee, it won't affect your credit—yet. Card companies don't report late payments to the credit bureaus until they are 30 days past their due date. If that happens, your credit score will likely suffer. Making your payment as soon as possible helps you avoid credit problems.
- Contact your card company. If this is your first late payment—or if it's been a long time since you've been late—your credit card issuer may waive your late fee. Some cards feature a one-time late fee waiver as part of their terms and conditions. You may also want to ask your card company whether your late payment will trigger a penalty interest rate. Credit card issuers may raise your interest rate on future purchases, cancel promotional rates or even raise rates on existing balances when your payment is past due. If you can't negotiate your way out of a penalty APR, ask what you need to do to resolve the issue and get back to your regular interest rate, which usually involves at least six consecutive months of on-time payments.
- Monitor your credit. A payment that is made 30 or more days past due will appear as a late payment on your credit report, as will subsequent late payments if you continue to miss your payment due dates. Late payments stay on your credit report for up to seven years and can lower your credit score the entire time, though the impact of late payments diminishes over time. Monitoring your credit score and report is a good practice at any time, but if you've recently missed a credit card payment, you may want to make doubly sure your credit file accurately reflects what happened and understand how late payments affect your score.
Avoiding Late Payments Altogether
Making a late credit card payment happens to the best of us. And though it's not the end of the world, you'll save money, aggravation and possibly preserve your credit score if you avoid late payments altogether. Worried about late payments you may have made in the past? Check your Experian credit report and score for free and see what your file reveals. By getting a handle on what's been reported in the past and taking steps to pay on time in the future, you'll set yourself up for success.