Paying Bills on Time:  Why it Matters

Paying Bills on Time: Why it Matters

Paying your bills on time is an important aspect of taking control of your financial life.  It can reduce stress and allow you to rest easy knowing your financial house is in order.  


Why it matters to pay on time.

There are several reasons why paying your bills on time matters.    For starters, payment history is one of the most important factors in your credit score and typically accounts for 35% of the calculation.  Late payments on current or past credit accounts will typically lower your score.  Paying on time consistently helps you establish a good credit record and can boost your credit score, which in turn increases the likelihood of being approved for credit in the future and the likelihood of paying lower interest rates.

Not only will paying your bills on time help your credit score; it will also save you money. In addition to paying less in interest charges by receiving lower interest rates on your credit accounts, when you pay your bills on time you avoid paying late fees or penalties and you won’t have to worry about triggering an interest rate increase.

Finally, paying your bills on time reduces stress.  No late notices, no collection calls, no breaks in service.  Just general peace of mind that you are in control.

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Tips for Paying Your Bills On Time

If paying your bills on time is a challenge, here are some simple tips to get you started.  Try one or two, then a few more.  Before you know it, paying bills on time will be a habit and a priority!  Your financial stress will lessen and your confidence will increase, all while saving money!


Tip 1.  Sign up for auto-pay. 

Most recurring bills – utilities, mortgage, car loan, etc. – provide an option of having your payment automatically deducted from your savings or checking account. You can also create your own “auto-pay” by scheduling recurring payments directly from your account with online bill pay. Make it easy by making it automatic.



Tip 2.  Set up bill-pay reminders.  

This can be as simple as notes on your calendar, notification reminders through your financial institution account access app, or alerts with personal financial software.  Consider setting reminders to prompt you on pay days or a certain number of days before your bills are due. 


Tip 3.  Set aside a regular time to pay your bills. 

Consistency creates habits.  And once you’ve created a bill paying habit, you will be less likely to miss a due date.  Consider setting aside time weekly, twice a month, or even the day you receive the bill!



Tip 4.  Organize bills. 

As soon as you open a bill – whether you receive it in the mail or via email – arrange/file it by due date and set a reminder (remember Tip 2). If you’re a visual person, consider purchasing a desk-top file so you have an immediate visual reminder of which bills need to be paid next.  You can even print out e-bills to include in this file.


Tip 5.  Give your payment time to arrive and to be posted to your account.

This is especially important is paying by check and mailing your payment.

Understand your pay days and your bill due dates.  Knowing when your bills are due and what pay check you will use to pay them can make all of these tips easier to follow.  And, if you find there’s a bill that doesn’t quite line up with your pay schedule, consider contacting the biller to ask about changing the due date.

For more information on paying bills, budgeting and money management, visit the Helpful Resources available from your neighbors at American Eagle Credit Union.  Or, listen in to our Money Matters segments with McGraw.

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