Making a payment by phone is convenient– but it may cost you…
Besides taking a big bite out of your budget with fees as high as $39, late credit card payments can have severe consequences because issuers often raise interest rates dramatically after just one incident. With a fast approaching due date and no time to mail a payment on time, consumers often opt for payments by phone. It’s as easy as calling your credit card company, providing a checking account and bank routing number and authorizing the transaction. But beware– the cost could be substantial.
A Consumer Action survey reveals that some issuers charge hefty fees to make on-time payments by phone. Thirteen out of 20 surveyed banks charged a fee for payments made by phone. Fees range from $3 to $30 per transaction with an average fee of $9.23. None of the banks charged people who pay online, however several banks had fees for “expedited” payments– or payments made at the last minute, but still before the due date.
Whether you pay electronically or by phone, make sure you allow plenty of time for processing. These are not “real-time” transactions. Be aware that some banks require payments to arrive before a certain hour on the due date. These times very widely. Also, be sure the money is available in your checking account as a payment made from an account with insufficient funds will warrant a bounced check fee averaging $32.
Consumer Action also asked representatives from credit card agencies about due dates that fall on holidays. Not getting a straight answer, it is advised that you make your payments well in advance of the posted due date to avoid penalties. “Charging people a late fee when the due date falls on a non-business day is patently unfair,” said Ruth Susswein, Deputy Director, National Priorities of Consumer Action, a non-profit, membership-based organization. “If the mail is not delivered on your due date, how can you avoid a late fee? This policy is just another excuse to charge unjustified late fees to customers.”