Money Saving Tip
Set Up Automatic Bill Payments
Paying a bill late can be costly: Late fees, interest, even cancellation of the account can result from paying a bill after its due date. The effect can snowball if you combine a tight budget with disorganized bill paying system.
Once a bill payment has been skipped, it becomes psychologically harder to pay. It's already late, right? Looking at or even thinking about the late bill brings a mean little zing to the stomach. It's easier to ignore it, and once ignored, the money that should be going toward the bill may end up being spent on some non-essential item in an effort to help you feel better. It's a wicked cycle.
Of course late payment of bills also reduces your credit score. Virtually all of your credit card companies, mortgage companies, and banks are reporting your payment history to the major credit reporting companies. They will report your monthly payment amount, whether it was paid, and the remaining balance owing on your account. Each reported late payment is flagged by the credit reporting company and will ultimately be used to caculate your credit score. Low credit scores means higher interest on your loans and credit cards.
Setting up your bills to be automatically paid from your checking account is a good step toward simplifying your finances.
Automatic payment can work in two ways: First, you can simply sign up to have the billing company make a direct debit to your bank account for the amount of your bills as they come due. This works well with bills that are the same amount each month, or with bills such as utility bills. The bills or statements of the amounts owing should still come in the mail or by email notification so that you can review each one before they are deducted from your account.
The other way to use automatic payment of your bills is to indivudually schedule the bill payment through your online banking account. When you receive a bill in the mail, you log onto your online bill paying account and then schedule the date and amount of payment of the bill. The first time you pay a company, you will have to set up their name, address, and account number. I have found that this is very easy, especially since my bank has many vendor addresses already on file and I need only to verify that the address is correct.
For credit card bills that you are paying off, set up a regular automatic monthly payment that is equal to or greater than the minimum monthly payment. You can always edit the payment to make it higher and you can also make additional payments. Having the minimum payment automatically made before the due date has the potential to prevent large late payment fees plus and possible increases in the interest rate on your credit card purchases.
Some banks will charge a small monthly fee for online bill payment. Some will offer it for free for a set amount of payments and then charge for the number of monthly payments over that set amount. Usually the charge is small. My bank charges $.50 per additional payment. I get 10 free payments a month. Since postage is $.49 a stamp, the fee is very reasonable.
Don't feel that you have to sign up all your bills for automatic payment at once. Just start with the bills you have on hand and continue setting up the bills as they are received.
Automatic bill payment is something that can save you time, money, paperwork, and stress. Try it! It's a great way to save a few fat dollars. And that's The Fat Dollar way!
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The Fat Dollar Ideas
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Vitamins and Fruit Juice - save $63.87 a year and 20,440 calories
Microwave Muffins - Worth the Energy Savings? - the experiment and the recipe
Save Grocery Money Books - free bonus cookbook with purchase
In the Home - tips and ideas to save money in your home
Manage Your Money - Tips for managing your Fat Dollars
Bartering Online or Offline - To fatten up your dollars
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