3 Bills You Should Never Pay Late Due to Expensive Fees
Written by
Laura Gariepy
Edited by
Susan Kim
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Depending on your financial situation, paying a late fee can be annoying or budget-busting. If a bill slipped your mind one month but you had sufficient funds to cover it, the added cost is just a painful reminder to be more careful with your money. But if you paid the bill late because you were short on cash to begin with, the extra expense could make your budget even tighter.
We spoke with two financial experts and got their take on which bills you should (try to) never pay late due to late fees. They also offered some tips to help you pay your bills on time.
Credit Card
Currently, credit card late payment fees can be $30 or higher. However, within the next few months, the expense will be limited to $8 per month, thanks to Biden capping what credit card companies can charge.
“Credit card companies will [still] be allowed to charge more if their costs to recoup the money owed exceed that $8 amount, but they will have to provide evidence of those excess costs, which is not likely to become common in the case of most late payments,” said Todd Stearn, founder and CEO of The Money Manual.
“It’s worth noting that paying a credit card or any type of loan bill late can negatively impact your credit score. And what that could cost you down the road in higher interest rates could easily exceed the cost of the late fee many times over,” Stearn said.
Kelley Long, certified financial planner (CFP) and host of the Financial Bliss Podcast said, “Even if you can’t make the minimum payment, at least call the card company and ask if you can make a partial payment by the due date and have it count for that month. It may lead to more interest, but avoiding having that late fee plus a potential hit to your credit report is important.”
Utility
“Getting your water turned off may be one of the biggest inconveniences you can suddenly face for missing a bill. Now you can’t shower or even wash your hands or do dishes, laundry or a variety of other things you may not even think of until you go to do them,” Stearn said.
But beyond that, many areas are charging higher reconnection fees than you might think. Last year, Jacksonville, FL, raised its water reconnection fee from $15 to $50. Meanwhile, across the country in San Francisco, CA, the late payment fee is only 0.05% of the bill per 30-day period and no reconnection fee is assessed. So this fee can range from quite significant to minimal, depending on where you live,” Stearn said.
Rent
Shavon Roman, personal finance expert at Heal. Plan. Invest., said, “Pay your rent on time. The late fees are added daily and most states do not limit late rent payment fees [or] require a grace period. The fees range from $5.00 to 5% of the rent. Please remember to look over your lease before signing it and negotiate a grace period or extended grace period if one is already in place.”
How To Pay Your Bills on Time
Here are a few steps you can take to ensure you never miss a bill deadline again:
- Set up automatic payments for your regular bills. That way, you won’t forget to send your money. Plus, some companies offer autopay discounts (the opposite of late fees).
- Schedule payment reminders on your smartphone’s calendar. “Add bill due dates as an event with a notification at least three days before the due date,” Roman said.
- Have a bill-paying routine each month. You may also want to open a checking account specifically to pay your recurring bills, Roman said.
Long added, “By separating your bills from your other spending, you can have a clearer idea of what’s left for spending on more flexible expenses. If it’s close to payday and you’re running low, you can wait to make certain purchases [to] be sure the bills are always paid on time.”
If You Miss a Payment
You’re human, so chances are you’ll eventually miss a bill payment. When that happens, take a deep breath and stay calm.
Then, contact your creditor or the company you owe money to. You may be able to have the late fee waived, especially if you usually pay on time and can make your required payment immediately.
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