While you may not be able to pay your credit card in full each month, there is one easy way to avoid an unnecessary late fee. With most credit card companies charging $30-$40 for a late fee, it’s easy to see how quickly these costs can accumulate.
For that reason alone, this is something I recommend to all of my bookkeeping clients, and it’s something I will implement automatically for any client who I also handle bill payment for.
It’s most often referred to as “automatic payment”. But don’t get alarmed. This does not mean the card needs to be paid in full.
Setting this up is incredibly easy with most big banks, such as Chase, Capital One, Citi, and Wells Fargo.
Most credit card companies offer three different options when setting up automatic payments:
- Minimum Payment
- Any other set amount
- Pay in Full
TBA Tip: Use the minimum payment option if there are any cash flow issues. You’re allowed to make multiple payments to a credit card during a billing cycle, so rest assured that you’re not locked in to “only” making a minimum automatic payment. You can always pay the minimum now and then make another, larger payment once you have the funds to spare. You could also set up this really cool free service.
Lessons Learned: My Personal Story
I was in Hawaii earlier this year. In the midst of trying to juggle both work and vacation, I entirely forgot to pay my Chase card. I was irritated to no end about the finance charge, but was relieved that at least I hadn’t also incurred a late fee due to my forgetfulness. Surely that would have put a damper on my tropical trip!
TBA Tip: If it’s an incredibly uncommon oversight, it may be worth calling the bank to see if they will waive the finance charge. If you ask nicely, they might have mercy on you!
Simple automations like this can help you keep more of your hard earned money, and that’s always a win!