By John Campbell

Paying any of your bills late may now be more costly than ever before.

Thanks to a little known “universal default” clause in many credit card agreements, one late payment to any biller you owe money to can automatically cause your interest rate to skyrocket up to 24 percent or higher on some of your credit cards.

Pay even a utility bill late and all of your credit cards with the universal default clause could quickly cost you a lot more. Your monthly interest rate on these cards could more than double, making it a lot more difficult to pay off your debt.

You simply can’t afford to be late making any payments for any reason. Luckily for you, it’s easier than ever to guarantee your payments will arrive to the billers you need to pay every month.

The easiest and most convenient way to pay your bills on time is with online bill pay. Many banks now offer online banking with free or low rate online bill pay. With online bill pay you can transfer funds directly from your savings or checking account and send payment to a biller electronically.

As long as you send your payment at least 3 - 5 days before it’s due, it shouldn’t be late. Electronic transactions typically take 3 - 5 days to post to an account.

You may also have the option of automatically transferring a set amount of funds to a specific biller. Once you have an automatic transfer set up you don’t have to do anything more - the funds will transfer over at the same time every month.

If paying your bills online is not an option you may have to resort to the traditional method of paying your bills by sending in a check or money order. If you send payments via the mail, make sure to send payment at least 10 days before it’s due. This will allow plenty of time for payment to arrive where it’s due and go through processing.

If you waited until the last second to make a payment and you can’t guarantee it will arrive on time, some billers will allow you to make a one-time payment over the phone with either a credit or debit card. Credit card companies often charge a steep fee for this service, which discourages many people from paying their bills right before the due date.

Whatever you do, don’t allow any of your payments to be even a day late. If a credit card company states that payment is due by 12 p.m. on the 22nd of each month, your payment better not arrive even a minute late or you’ll be slapped with a late fee and resulting late payment notation on your credit report. Don’t expect to be saved by any grace period whatsoever, as most creditors now consider them to be a thing of the past.

If you sent your payment in well before the due date but still get listed as making a late payment, contact the biller in question immediately. If you paid your bill electronically, you will have a confirmation number for the transaction that you can provide as proof of your timely payment.

If you sent payment via the mail it may be more difficult to prove you sent payment on time. In the worst case scenario your payment could get lost in the mail. Even if it isn’t lost and was postmarked well before the due date, many credit card companies in particular will still consider your payment as late if it’s not processed in time. Sometimes employee carelessness or mishandling of payments can cause many payments to be listed as late by mistake.

As long as you don’t have a history of making late payments, you should be able to convince a representative of the biller in question that your payment should have arrived on time and get them to reverse any potential late fees as well as any black marks on an otherwise perfect payment record. If the rep refuses, ask to speak to a supervisor and threaten to close your account if your request isn’t approved. If you already have an excellent payment history, many billers won’t want to risk losing your business over one simple dispute.

If any of your credit card payments are listed as late, even after you dispute it, stop using the card immediately. You don’t want to make any purchases with a 20+ interest rate. As soon as you get the card paid off cancel the account as well. You can easily take your business to another credit card company that is more consumer friendly.

As long as you make your payments within the required timeframe you shouldn’t ever have to worry about being late. Even if you’re listed as being late by mistake you don’t have to take it lying down.

The alternative could cost you dearly.

© cashbuzz.com
John Campbell is the writer and editor of CashBuzz, A financial portal for the rest of us. Check out cashbuzz.com for the latest articles on money management and tips and tricks that can help improve your finances. This article may be reprinted on your Web site if the copyright, author information and active link are included.