Stop Paying Costly Late Fees and Overdrafts With These Tips

If you’re fed up with paying late fees on your credit cards and overdrafts to your bank, these tips should help. When you live from one paycheck to the next, or maybe even worse, you don’t know when you’re next paycheck is going to come – it’s difficult to juggle the bills and due dates. Taking strides to improve your financial situation can save you both in terms of late fees and overdrafts – but also in the long run. Credit card companies routinely increase interest rates on cardholders who pay their cards after the due date, since you’re seen as a bigger financial risk to them.

The following tips will help you minimize late fees and overdrafts:

When Is it Due, Exactly?

When money is tight, many people find themselves sending all of their payments in on the day they are due. You would think as long as it is postmarked by the due date, or paid online on the due date, it should be considered “on time” right? Check the fine print on the back of a credit card statement to see when the late fees are applied – technically a late fee can be applied if a payment is not received and posted to your account by a certain TIME on the due date – even if it’s postmarked on time.

Do what you can to change how you pay your bills – if they’re due on the 15^th, pretend they’re due on the 10^th. This will give you 5 days for your mailed checks to arrive and get posted; or 5 days for an online payment to be posted. (Did you know some online payments take 2 days to post to your account?! Why isn’t it instant? Who knows – but knowledge is the power here. Even when paying online, give yourself a few days before the due date to ensure there is enough time for the payment to post).

Change Your Due Dates

Instead of just pretending you have an earlier due date, you can actually change many of your account due dates. If you find almost all of your bills are due on the same day of the month, you can call and change due dates and stagger them out across the month if that makes it easier for you to pay. Instead of coming up with the full amount for all of your bills by the 10^th of the month, you can pay a few each week, which makes managing your cash easier.

If you have a mortgage that you pay monthly, you may even consider asking the mortgage company for a bi-weekly mortgage plan. There is usually a fee to set it up which increases the amount you owe over the year, but you pay less interest over the life of the mortgage. Plus, if paying half of your mortgage payment every other week is easier than paying it all at the end of the month, the money you save in late fees or overdrafts is probably more substantial than the fee charged by the mortgage company for setting up a bi-weekly payment.

Bank Regulations Help Reduce Overdrafts

Previously, banks were known to change the order of withdrawals so that the most expensive withdrawal would post the account before any of the other, smaller withdrawals that clear in the same time frame. This meant if you were a few dollars short, instead of having one overdraft for the last withdrawal to clear the bank – you would have multiple overdraft fees for each individual withdrawal if the largest withdrawal was processed before the smaller ones.

Luckily, changes in banking regulations are putting a stop to this practice. You can even opt-out of overdrafts by signing a form with your bank that prevents them from paying any withdrawal that you don’t have enough money to cover.