Monday, December 8, 2008

Pay Attention to Pennies and Minutes When Paying a Credit Card Bill

Most consumers know that there are penalties for failing to pay their credit card bill in full or on time. But the penalties can be no less severe when you are short a few pennies or late a couple of minutes with your payment.

When paying your credit card bill, you probably know that if you can't pay the amount in full, you should at least pay the monthly minimum. Doing so will spare you the pain of getting walloped by an interest rate that suddenly jumps to a much higher level. However, you could still get hit with a spike in your credit card's interest rate if your minimum payment is even a few pennies shy of the monthly minimum.

Let's say the minimum payment on your latest credit card statement is $230.11, but the check you mail out totals $230. While that $0.11 difference may not be much, it can end up costing you lots of money. That is because your credit card issuer will still consider your payment below the minimum payment due. And, as all wise consumers know, credit card interest rates may go up when the payment is less than is required. That could spell trouble for what may have started out as a low interest credit card.

Meanwhile, you likely make sure to get your credit card payment sent out so that it reaches the bank in plenty of time before the due date. But what if you happen to mail a check or approve an online payment that arrives late, even by a few minutes? In the credit card issuer's eyes, your payment is late nonetheless. And, that could result in a hefty late charge on your next credit card statement.

One way to make sure your full credit card payments get where they need to be on time is by setting up an automatic electronic payment plan. You can do this through the bank you have a checking account with or through the website of your credit card issuer. Most credit cards list a website address on the back, which you can visit to set up a user ID and password. If you encounter any problems, you can dial the toll-free customer service number that is usually listed on your credit card or on your card statements.

Even if you have great credit, a small mistake could tarnish you excellent credit history. So be sure to pay the minimum on your credit card bill (or more) in advance of the due date.

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