We’re all strapped for cash so when some of our hard earned money goes toward paying fees and penalties, it hurts more than usual. Late payment penalties lead to outrageous fees and interest rates – it’s like they want to get their ‘pound of flesh’ from us while they can – think Shylock.
Let’s look at a few items we can avoid paying penalties on and some tips on how to avoid these pesky penalties.
- Credit card late fees. Most credit card companies issue a penalty fee if you fail to make a payment by the respective due date. Oftentimes, you’ll be charged $25 for your first violation, but you could be charged $35 (plus interest) for each violation thereafter. Not to mention, your credit score plummets with each late payment made.
- Late payment on property taxes.If you make a late payment on your property taxes, you’ll oftentimes be charged a fee, plus interest and see it automatically added to your bill. But, be careful: If you acquire enough penalty fees, they can add up to a substantial amount and could even cost you your home. Because states rely heavily on the property taxes they receive, they pay serious attention to on-time (and not-so-on-time) payments.
- IRS Failure-to-File Penalty.If you were wondering if you’d get penalized for forgetting to file your taxes, the answer is overwhelmingly yes. If April 15 rolls around and you have not requested an extension, you’ll be charged right away. If you did request an extension and still failed to file on time, you’ll be charged on your extension date. Typically, the penalty fee is equal to 5 percent per month on the owed tax liability, but it can never exceed 25 percent of the originally owed tax amount.
- Mortgages.Defaulting on a mortgage payment is never a good idea. It can drastically lower your credit score and it can ultimately lead to the take-over of your home or property. First, though, come the late fees. If you default on a mortgage payment, you could end up paying interest from 18 to 85 percent on your outstanding mortgage payments. It makes the average credit card interest rate (16.75 percent) look like nothing.
- Car Registration/DMV fees
Failure to renew your car registration on time leads to late fees and penalties. Not to mention the risk of being ticketed by an officer for driving with an expired license leading to even more money spent for not renewing your registration on time. It is very important to pay the DMV fees on time, before the expiration date of your car registration. The majority of states do not offer any grace time to car owners. The more you delay your renewal payment, the higher the fine amount will be.
We know there are no ways to avoid these bills so here are some easy ways to ‘save’ money by just paying on time!
Bill Reminder Service: Consider using a service that will download your bills and send you reminders when they are due. One such free service is Finovera.com. The site will download your bills and will send you an email or phone reminder when the new bill is available and when it is due.
Bank Automatic Payment: A good way to avoid late penalties is to have an automatic payment setup via your bank account. This could be the minimum payment that is required. But you still need to make sure you check your bill and pay the balance. Consider setting reminders on your phone’s calendar or consider using a free online bill tracking service to do the job for you.
Auto Pay via the Biller: Let the biller retrieve the money from your bank account or charge your credit card automatically. The downside to this option is that you’re likely to not pay attention to the bill amount, thus you may not know if the bill is irregularly high or if it has some odd charges on it. If you do choose this option, consider using it with a service like Finovera.com which will still let you know the bill amounts and provide you with other customizable alerts.
Bill ‘Review’ Time – Have a time setup once a month where you review and regroup on your bills. Make sure that you don’t have a new bill that still needs to be setup for payment. If you have added a new bill such as a recently opened new credit card, set it up to pay regularly. Review the existing bills – if you use a service like Finovera.com these bills will all be available in your account.
Remember, it’s your hard earned money and you want to avoid throwing it towards easily avoidable late fees. So use tips to simplify your bill pay duties.