Patrick Payne | 
04 10th, 2009| 
I hate late fees, don’t you? Problem is, in the complexity of our daily world, things can slip past us sometimes. It happens.
That’s why I love this great tip from Isemel on the I Will Teach You To Be Rich forum.
I always pay my credit card off in full, but once in a while I forget to make the payment by the deadline. When that happens, there’s a ridiculous late fee of $29.99 or more.
Here is how to stop late fees once and for all: Get a bank account that offers free online bill pay. Set up automatic payments to the credit card, at regular intervals, of an amount that exceeds the minimum payment. For instance, if your minimum payment is typically $20, set up your online banking to automatically pay the credit card $20 automatically.
This way, even if you forget to pay the rest of the bill, you will have already paid the minimum and will not get hit with a late fee.
In my opinion, it is very effective to automate your finances as much as you can, because our finances are so complicated these days. When automating your bills, though, there are two problems to be aware of.
- Insufficient Funds. Automatic bill pay can be problematic if you keep low balances in your checking account. A good way to try to prevent this is to schedule your bill payments to go out the day after your paycheck gets deposited.
- Incorrect Billing. The other problem you might face is the possibility that you might be mis-billed, or that you simply won’t know how much you are spending. The solution to this problem is to track your expenses regularly. My favorite way to do this? Mint.com
By automating your bill pay, you remove the unknown element: you. Systems are great because thye are reliable. People (no matter how vigilent), are prone to forgetfulness and error. So, automate at least a minimal payment so you don’t get hit with fees, then pay the rest yourself so you don’t get hit with interest expense.