Pay Your Bills on Time

Lots of people have the money to pay their bills, but they are lazy and sloppy. They figure no one is calling demanding the cash, so what's the hurry? I hope that's not you. If it's a loan from a friend, you're likely to lose that friend. If it's a loan from a relative, you're storing up long-term resentment that can bite you in the future. If it's a credit card bill or utility bill, you're looking for trouble when attempting to get more credit to buy a house or a car, or obtain any kind of loan on low-interest terms.

My latest credit card bill devoted two pages to what it called "Useful Tips." Here they are:

1. Pay on time.
2. Pay at least the monthly minimum.
3. When you can, pay in full.

Pay on time? What's that? If your attitude about paying promptly is lax, do not be surprised when your credit scores go down and the cost of credit to you goes up. Entities that loan money take regular on-time payments as a mark of your financial responsibility. The credit card companies do not need to know how much money you have in a bank account or the stock market. The companies want to know if you will pay on time. If you do pay on time, you will always get better treatment from your creditors than if you don't.

If you are too disorganized to pay your bills on time, simplify them. Many bills can be put on autopay, or you can set an alarm on your phone or computer to remind you to pay them all the day you receive your paycheck. You also can charge only to one credit card each month (rotate through them to keep them active). You don't need to use store charge accounts when they accept major credit cards, another way of reducing the number of bills you receive. If you want to take advantage of a store card benefit such as a discount, use the card, but then walk over to the store's service desk and write a check then and there to pay the amount you just charged. Done.

Pay at least the monthly minimum. This is another no-brainer, since your creditors will tell you exactly what the minimum is. If you really want to pay their exorbitant finance charges, go right ahead, but at least avoid late payment and low payment fees. The minimums due are very low and the late payment fees are very high.

When you can, pay in full. We now have consumer laws in place to require our creditors to remind us that stretching payments over many months or years results in paying two or three or more times the purchase price. It's not a bargain buy if you end up paying three times the price. Think twice about buying anything you can't pay for in full by the end of the first billing cycle.

There is no "secret they don't want you to know" when it comes to paying your bills. There is nothing fancy or mysterious about maintaining good credit. Pay on time.