The simplest way to avoid a credit card charge-off is to learn and understand the credit card system. Here are some tips:
Sending Credit Card Payments Through The Mail:
Some credit card companies actually require you to use their own preprinted envelopes, but even if they do not, it is a good idea to do so in the interest of more efficient processing of your payment. Make sure you have included the billing coupon and have written clearly the amount that you are paying. Include your check, also written legibly, and remember to write your credit card account number on the check.
When Ronald Reagan was running for President, he was asked what he was going to do to make the post office more efficient, to which he responded that he would start mailing postal workers their paychecks. Allow ample time when you send your check to the credit card company.
Change Your Credit Card Due Date To Something That Is Convenient For You:
Many people find that the greatest number of their bills, such as their mortgage or car payment, are due at the first of the month. If this places a burden on your ability to pay your credit card bill that may also be due at the first of the month, a simple way to avoid this problem is to just ask your credit card issuer to change the due date for your monthly payment. There is no harm in the asking, and many credit card issuers offer this ability to change the due date of your bill as an option. One important thing to remember, though, is that it may take a couple of billing cycles before this date change is fully implemented. It is important to make sure that your bill is paid promptly when due until your change of due date becomes effective. Otherwise, you could find yourself on the wrong side of a late fee.
About Late Fees:
In the classic television detective series Columbo, which starred Peter Falk, Lieutenant Columbo always seemed to be distracted and disorganized, but in reality he was extremely focused and observant. One common scene that brought delight to fans of the show was when Columbo left a room in which he had been speaking to the murderer. He kept turning around and starting question after question with, "Oh, just one more thing..." Then he trapped the criminal. Well, the credit card companies are not Lieutenant Columbo and we consumers are certainly not murderers, but when it comes to trapping us in the fine print of their credit card agreements, it always seems like there is "just one more thing."
Make Your Credit Card Payment On or Before The Due Date:
Your monthly payment is due on whatever date of the month it says on your credit card bill. If your payment is late, the fine print of your credit card agreement provides for the right of the credit card company to assess a late fee, which can be as much as $35 for each late payment. In the past, some credit card companies gave their customers five or even ten days of grace after the due date before assessing a penalty, but that is not the situation any longer. So you send your payment with sufficient time to arrive at the credit card company on your bill's due date.
But, just one more thing: Some credit card companies deem your payment late if it is processed later than 1:00 p.m. on the day of your due date. Some credit card companies don't receive and process mail until after 1:00 p.m.; therefore, the real date by which your monthly payment must be received is a day earlier than the date indicated on your contract. So you need to make sure your payment gets there three days ahead of the due date. Another Note: If the envelope contains a staple, a paper clip, or a note from you, the fine print of the contract specifies that there may be a delay of up to five days in posting your payment. This might cause a late payment to be assessed on a payment that arrived at the credit card company prior to the due date of the bill. I'll bet Lieutenant Columbo read the fine print before sending in his payment.
Make Your Credit Card Payments On-Line:
The most efficient way to make credit card payments is to make the payment on-line if the company offers that service. You can specify the amount you want to pay, which account you want it deducted out of, and specify the date you want the payment made. By paying your credit cards this way, you can set the payment to be made exactly on the due date so the credit card company isn’t getting your money any earlier than the due date and you have the peace of mind knowing you will never be late on your payment. Just be sure to set this up at least 3 days before the payment is due, otherwise there might not be enough time to process the payment in time.
Avoid Credit Card Interest Rate Hikes:
Another problem with late payments is that they can also trigger penalty interest rates as high as 29%; so, for example, instead of the 10% interest rate your card may carry, your rate will now be jacked up to 29% effective immediately. In fact, even if you are timely in your credit card payment, credit card companies generally reserve the right to raise your rate to a penalty rate if you are late with any other payment to any of your creditors, whoever they may be. Just read the fine print.
Can’t Make Your Credit Card Payment?
If you’re struggling with making your monthly payments, before you’re ever late on a payment, CALL YOUR CREDIT CARD COMPANY! Most credit card companies will come up with a reduced payment plan if you’re experiencing a hardship. You’ll want to do this as soon as you determine that you can’t make your payment, before the due date. You’ll want to negotiate a payment that you can afford with your creditor, then send that payment in on or before the due date so it doesn’t affect your credit.
You’ll want to be sure to get this agreement in writing and be sure to negotiate that this reduced payment WILL NOT be reported as a late payment on your credit report. Sometimes creditors will agree to a reduced payment, but they’ll go ahead and report it as being 30 days late because it’s less than what was contractually agreed to. If you get a letter from the credit card company agreeing to the reduced payment, along with a statement from the company that they will not report you as being late to the credit bureaus, you’ll have the proof you need to send into the credit bureaus if they don’t hold up to their end of the bargain. This happens more often than not, so make sure you protect yourself.
“Settling” Your Credit Card Balance For Less Than The Full Amount:
“Settling” a credit card account basically means that you’re paying less that the full balance. This technique is usually used if the account has already been charged off and can only be done if you have the money to pay them in full. If you’re going to attempt this, you’ll want to try to negotiate a “Pay for Deletion”, which basically means that whatever amount the two of you agree to settle the account for; the credit card company is also agreeing to remove the account from your credit report. By doing this, the charge-off and late payments will no longer negatively affect your credit score. For a sample Pay For Deletion letter, click here.
For more free sample letters to use when negotiating with your creditors, click here.
