Paying Bills On Time Pays Off

Finally! That new computer accessory you bought online came in the mail today … along with the electric bill. While your new toy is sure to get your initial attention, don’t neglect that electric bill. Why? Neglecting bills in general can cost you in a number of ways, not the least of which is causing damage to your credit rating.

Paying bills on time is the single most important thing you can do to cultivate a healthy credit rating, yet many people don’t seem too worried about late payments. As an example, according to a Princeton Survey Research Associates International Study, only 59% of young adults (ages 18-29) pay their monthly bills on time.

Yes, paying bills on time is important. Payment history makes up 35% of a credit score, more than any other single consideration (how much you owe, length of credit history, etc.). And, because a credit score can affect the rate that you get on a loan, a poor credit rating can cost you hundreds of dollars per month in additional finance charges. Your credit score can even affect your ability to land a job. It’s easy to see paying bills on time should always be a priority.

A lack of organization is at the root of many late payments, so the key to paying bills on time is to get organized. Here are a few simple things you can do get things in order.

• Open and process your mail right away. If you set it down, you may forget about it, or worse yet, lose it. It’s hard to pay bills when you don’t have the proper information.
• Put opened bills in a designated place. This could be a file cabinet, computer desk, shelf, shoebox … anywhere you know the bills will be when you’re ready to sit down and pay them. Use the same place all the time.
• Mark on a calendar when all bills are due. Or, make a list with all bills and due dates. In either case, check off each bill as it’s paid.
• Pick a location for paying bills, a place you will always use for this activity. Once again, this is your choice. It could be a desk, the kitchen table, a dresser, wherever you feel comfortable.
• Pay bills at least once a week, on the same day, at the same time. This will give you a steady schedule and make it easier to remember.

You can eliminate getting bills in the mail altogether if you choose to pay your bills online. Not only will it reduce paper, it’ll save you on postage costs as well. It’s easy to set up payments to just about any payee you may have, and it really helps remove much of the worry about paying bills on time. You can set up payment to go out on time, automatically, in many cases. And, with an online account management system like MyVantage, you can also set up Alerts to remind yourself of when payments are due, making the whole process much easier.

Also note, many bills come with payment options. For example, some insurance companies will give you the option of paying the premium in either monthly installments or in full every six months. If you can, pay in full every six months. This means you’ll have one less bill to worry about most months. You may also save money on monthly processing fees.

If your payments are late because you lack the necessary funds, you may need to revisit your budget and see where you might be spending too much.

Just remember, the most important thing about a budget is sticking to it. Live within your means and do not create additional debt. You may have to cut corners in some areas to pay the bills, but paying the bills on time will SAVE you money in the long run!