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Missed credit card payments can cost you hundreds, even thousands, of dollars each year in late fees and higher interest rates. If you miss a payment by more than 30 days, your credit score may drop, impacting other areas of your life, including your interest rate on new loans and credit cards and even the price of your homeowner’s and car insurance.
Granted, the Credit CARD Act protects customers who pay just a few days late. Unless your interest rate is set at a “special” or “promotional” interest rate, you must be 30 or more days late before creditors can enact a penalty or default APR. Under the Credit CARD Act, the “universal default penalty” has also been abolished. Credit card companies can no longer raise your rate due to late payments on other credit cards.
These measures protect customers who may run into financial difficulties. But it’s still important to protect your credit score by making all your payments on time. Today’s technology offers many different ways to avoid missing credit card payments. You can set up reminders to be sent straight to your email or smartphone through:
- Your credit card provider
- A finance site like Mint.com
For these purposes, I like Mint.com the best. The reminders always come from Mint.com, so I don’t have to scan my email for messages from three different credit card companies. Mint.com sends out reminders 7 days before my payment is due, with a nice little note. “If you’ve already paid, listen for applause.” It would be better if the program could actually track that you made the payment and skip the reminder (or better yet, say, “Congratulations, you made your payment early), but the seven-day warning works well from me.
You can also set up reminders to pay your bills in applications like:
- Google calendar
- an iPhone app like Bento, which helps you manage your to-do list, finances, contacts, and more.
When you set up reminders through your credit card company or Mint.com, the website sends out emails automatically. If you’d rather use a calendar program, you’ll have to go in and schedule the reminder(s) for the same date (or dates) each month. The new Credit CARD Act legislation requires that credit card payments are due the same day each month, so you don’t have to worry about your due dates changing without warning.
To set a recurring reminder and due date in Google calendar, click “Create event.” You’ll see a drop down menu labeled “Repeats.” Schedule the event to repeat monthly, then select “repeat by day of the month.” Set the “ends” date as “Never” and you’re done. (You won’t be making credit card payments forever, we hope, but you can always go in and change it when your credit card is paid off!)
Sometimes we miss a credit card payment not because we forgot about it, but because we simply didn’t have the funds available. You have a few options in this case.
1. Use a convenience check from another credit card to pay your credit card bill. You may be subject to additional fees and higher interest rates. Avoid this unless you have absolutely no other option, and don’t want to miss a payment.
2. Transfer your balance to another credit card. Give the balance transfer 2 – 3 weeks to take effect. Again, you may pay higher interest rates and balance transfer fees. Avoid this option if you can!
3. If you are enrolled in a payment protection plan, you can call your creditor and activate the payment protection plan. Your account will probably be frozen if you do this, but your credit rating won’t suffer from a missed payment. Some companies let you defer payment for a month due to major emergencies and even happy events like weddings. Some Chase credit cards permit you to take a payment holiday for one month after you face an unexpected expense, or for your choice of one of three bank holidays. It often takes time to process requests for protection plan activation. If you choose to deal with your credit card payment in this way, make sure to set the wheels in motion at least one month before your payment is due.
There’s one surefire way to ensure you never miss a credit card payment: Call or email your credit card company to sign up for automatic bill pay. We cover ways to do this with major credit card providers here.