Debt Free

According to some recent estimates, banks and other financial institutions generate as much as 30% of their revenue from late fees. Obviously this varies by institution, but you've got to wonder about their business model. That means they have a major incentive to make sure you have to go through a maze to ensure your credit card bills are paid on time every month. The more difficult they can make they can make it for card holders to pay their monthly bill, the higher their revenue. That's why some people notice a very short window between when they receive their bill and when it's due.

Currently, initial credit card interest rates are some of the lowest in history. That changes when you look at the average interest rate people are actually paying. According to the most recent U.S. Federal Reserve credit report (February, 2007), the average credit card interest rate is a rather hefty 15.09%! That's the average! That means that many people are paying interest rates far in excess of this. As you've no doubt ascertained, this is an extremely profitable state of affairs for creditors, less so for consumers. If the average American consumer wasn't addicted to credit like a tweaker is hooked on meth, it would be easier to get this situation to change.

It's absolutely vital to get all your credit card accounts switched to auto pay. It's about your only defense against higher interest rates and fees. Indeed, some consumers have reported that there is almost no time from when they receive their bill and when it's due. Read your credit card terms very carefully so you'll know exactly when your funds must be received by the lender. Often there's a time associated with it. Since you've no idea when the mail actually arrives at their P.O. Box, you should make sure your payment gets to their office at least a day early, preferably two or three. Why? Well, because the bill will be considered late unless it's actually posted by the date and time on the agreement. You have no idea how long it'll take them to post your check, so better to be safe than sorry. In addition, you can see they have no incentive to post your funds in a timely fashion.

Another smart move, if your bills aren't on auto pay, especially for important accounts such as mortgages, is to send the funds using receipt confirmation form the U.S. Postal Service. This way you can be sure when the check arrived in their office. It's saved me from a late fee on more than one occasion. Make sure you waive signature confirmation, because mail delivered to a P.O. Box has no one present to sign for it. That's important, unless you want your check to sit in limbo for a while and eliminate the very reason you used the service in the first place.

Remember, the creditors have a financial disincentive to make it easy for you to pay your credit card debts on time. In fact, their best customers are those who always pay their bills, but are a few days late once in while. Those customers are the real meat for them. Talk about a profit center. There is very little risk they'll default, but a very large opportunity for the bank to generate additional interest and fee income. If you're one of those customers, look out. Hey, it can be hard enough to get debt free. There's no need to help the finance companies, banks and other credit card companies Hoover even more of your hard earned money out of your wallet. You can at least make it as difficult for them to increase their revenue as they make it for you to keep yours.