How to Get Rid of and Avoid Late Fees

By Matt Bell. Last updated 27 December 2011. 10 comments
Photo: Achi Raz

Here’s a quiz — other than a catastrophic financial event, like a bankruptcy or foreclosure, what financial activity is most damaging to your credit score?

If you chose, “Paying your bills late,” you’re right. Of the five main factors that impact your credit score, your on-time payment record carries the most weight. Of course, paying late doesn’t just dent your credit score, it dents your wallet in the form of late fees.

The best way to get rid of late fees is to never incur them in the first place. Here’s your guide to building an impenetrable late fee avoidance system. (See also: 6 Tips to Shrink Your Bills Every Year)

Pay Right Away

Do you have a stack of bills sitting on your desk or kitchen counter? Are they at least stacked with the one that needs to be paid the soonest on top? Even so, to avoid late fees, get in the habit of paying your bills the day they arrive. Sure, you’ll lose “the float,” the time between the arrival of the bill and the due date when your money could be sitting in your interest-bearing checking account racking up all that .01% interest. But getting slammed with a late fee, typically $25-$39, will wipe out about 13 lifetimes of earnings at that rate.

Pay Online

If you’re still paying bills by check, consider switching to electronic payments, which arrive faster and never get lost in the mail.

The most sure-fire way to avoid late fees is to automate your bill payments. Just about any monthly bill can be paid automatically. Whether you should do so is partly a matter of whether you trust that the right amount will be billed each month.

We pay our mortgage, health insurance, and some of our utilities automatically. However, we take a manual approach to paying our phone and credit card bills online, preferring to check those bills more closely for accuracy before clicking the “pay” button.

Ask for Reminders

No matter how you pay, sign up for e-mail and/or text reminders about upcoming bills. Most companies that you spend money with on a regular basis offer electronic reminders. Since we use Mint.com, which also sends notifications of upcoming bill due dates, we get two electronic reminders for most of our bills.

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Remind Yourself

One of the reasons why air travel is so safe these days is because of redundant systems. If one flight control computer system fails, there’s another one to automatically take its place.

You can build redundancy into your on-time bill-pay system as well by putting reminders in your calendar. Most electronic calendars allow you to set up recurring events.

If one of your credit card bills is due on the 11th of every month, you can set a reminder one time and have it show up on your calendar every month on the same day. Of course, set the reminder for at least a few days before the due date to make sure the bill gets paid on time.

I use iCal on my Mac. To set a recurring reminder, just choose New Event from the File menu and where it says, “repeat,” choose “monthly.” If you use Google Calendar, hit “Create,” add an “Event,” click the “Repeat” box, and fill in the details.

I also use different colors for different activities in my electronic calendar, which makes the bill due dates really stand out.

And remember, it isn’t just credit card companies that dole out late fees. Insurance companies, libraries, video rental companies, and many others will slap you with a fee if you pay your bill late or return their stuff late. So, put all of your due dates in your calendar.

If a Late Fee Happens to You

If somehow a bill slips through your impenetrable late fee avoidance system and you incur a late fee, call the company that hit you with the penalty and plead for forgiveness. If you’ve been a customer for a while and have had a clean record up to now, you stand a good chance of getting the fee wiped off your bill. However, if at first you don’t succeed, ask to speak to a customer service supervisor. Be super kind, accept responsibility, and let them know what steps you’ve taken to avoid paying late ever again (see above steps).

What other steps do you take to avoid late fees?

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Meg Favreau's picture

Putting due date reminders on my Google calender was huge for me -- it became much easier for me to keep track of payments after that. I also recently started automating some of my bills (I held off for a long time while I was still in "freelance/when's the money coming in?" brain), which is realllllly nice.

Guest's picture
Tony

Great post!

My wife and I were once plagued by late fees due to how we were incorrectly handling money. Most of the time these fees happened not because we didn't have enough money coming it, but because we were just not paying attention to our account. After we started being really intentional about our finances we saw a huge shift in our financial position as well as our relationship with each other!

Great advice!

Matt Bell's picture

Tony - Really interesting insight about how becoming more intentional about your finances impacted your relationship with each other.

Guest's picture

Yea late fees are a killer. You need to know exactly your credit card dates.

For me on one its statement date is on the 4th, has to be paid by the 28th of the following month

Other its the 11th, payment due by the 5th of the month (2 months ahead)

Credit cards are great for the cash abundant person. However if you are not prudent with paying off your bills, tear up your credit cards..

Guest's picture

These are all great suggestions. People don't really realize that one simple phone call to your creditors can make all the difference in the world! I remember one time I was being charged for a "premier checking account" that I never signed up for, and they went back 6 months and credited be back $120.

Matt Bell's picture

So true, Kevin. And that advice applies in so many areas. When I finally upgraded to a smartphone recently, I was going over the monthly service contract and noticed a $72 charge for the privilege of upgrading to a more expensive monthly plan. I called Sprint right from the Best Buy store and they removed the charge with no push-back. It's amazing what you can get with, as you say, one simple phone call.

Guest's picture

Yea just contacting your credit card company can make all the difference..

The "confronter" in life always gets ahead..

Kentin Waits's picture

When a payment slips through the cracks, calling the company is key. I've been able to get most fees waived (especially with companies that I've been doing business with for years). It's always helpful to leverage a bit of that consumer power in tight spots. Great article!

Guest's picture

Late fees are a drag. What we do in our household is spend this month's income next month. That way, we don't have to worry about bill due dates - we just pay the bill when they are do! However, we do have a reminder system like what you talked about in the article, but we use a task management program to remind us when bills are due.

Thanks for the excellent article! Appreciate it!

Guest's picture
shannon

I signed for an employee to have surgery for her dog. Little did I know that the bill would come in my name only. GE Capital Credit Care. Although a promise to pay was something I hear every month, I did not get it. I paid on this bill for a full 17 months until I retired. Once the interest kicked in the monthly amount went up. As a retired on a fixed income I could not afford the higher payment. Called and spoke with many people on how to get a payment without impacting my credit. Rude, nasty people and I got nowhere. I still pay the monthly amount I initially did but am always late because it is not what they requested. I do not and will not pay the late fees, the employee is still not paying and I know my credit is shot because of this one bill. Anyone got any suggestions?