Unless your credit card company lacks an online account management feature, you should take advantage of online payment options. With online payment, you can make sure your credit card payment is always on time and prevent “lost in the mail” situations that can lead to late payments, interest rate increases, and credit limit cuts.
The key reason to pay online is to prevent “lost in the mail issues.” Many people rack up late fees because their checks, for one reason or another, arrive a few days (or even minutes) late. With online bill pay, you know your payment is on time and you get nearly instant confirmation.
If you’re the type of person who waits until the last minute to mail in your check, you’ve probably paid more than a few late fees. In the past, credit card companies often waived these fees and related penalties. Under the strict rules of the CARD Act, banks are now limited from charging many lucrative and expensive fees. Thus, they are much less likely to waive fees, even on good customers.
Another, more pressing issue that can arise from late payments are credit limit cuts and interest rate increases. In 2010, credit limit cuts have garnered the most complaints on Smart Balance Transfers. And many banks are looking for any reason they can to reduce credit limits. A late payment, even if it is only one day late, might be enough to put your credit limit on the chopping block.
Interest rate increases are yet another issue. Although banks can’t raise rates on your existing balances, they can raise rates on your future purchases with 45 days notice. One late payment may not trigger a rate increase, but two could easily do so.
Clearly, there is much to gain and little to lose by using online payments. Don’t, however, start getting online credit card statements. Getting a paper bill is a great reminder. But paying that bill with a check can be costly, even if you mail your check on time.
-Jennifer Davide
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