The simple hack to save on credit card penalties

Managing credit card payments can be challenging when balancing multiple bills and due dates. Missing just one payment can lead to penalties, which can accumulate and strain your budget. But there’s a simple way to avoid these fees: set up autopay on your credit card bills.

Autopay is a feature offered by most banks that automatically takes care of your credit card bill on its due date, drawing funds directly from your bank account. It’s a great way to make sure you’re always on time, no matter how busy life gets. Plus, it’s not just about avoiding fees—autopay can also help keep your credit score in good shape since timely payments are crucial for your credit health.

Benefits of Setting Up Autopay

There are many reasons to set up autopay on your credit card, especially if you’re looking to manage your finances efficiently and avoid missed payments.

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Avoid Late Fees and Penalties

One of the biggest benefits of autopay is to help you avoid late payment fees, which can add up quickly. Credit card late fees can vary, depending on your card type and outstanding balance. Missing even one payment can result in additional fees.

With autopay, you’re shielded from these penalties, as the payment is automatically processed on the due date. This is particularly useful if you’re busy, traveling or otherwise unable to manage payments manually each month.

Preserve and Boost Your Credit Score

Your credit score is crucial for availing financial products, from loans to premium credit cards. A single missed payment can negatively impact your credit score, as payment history constitutes a significant portion of the score calculation. Credit bureaus closely monitor your payment behaviour, and timely payments positively impact your score.

Autopay eliminates the risk of accidental missed payments, helping you maintain a healthy credit history. Over time, this consistent payment record can lead to a higher credit score, enabling better access to credit at favourable terms.

Reduce Stress and Save Time

Many credit cardholders experience anxiety overdue dates, reminders, and the fear of missing payments. Autopay takes away this worry by simplifying your payment process. With autopay, you won’t need to track multiple reminders or go through the process of logging in to pay each month. You can focus on your day-to-day without needing to carve out time for financial housekeeping. Set it up once, and you’re done – autopay handles the rest.

Control Over Payments

One of the best parts of autopay is the flexibility to choose how much you pay. You can set autopay to cover either the minimum due or the full amount due each month. Paying the minimum ensures you avoid penalties, though you’ll still accrue interest on the remaining balance. Opting to pay the full balance each month, however, helps you avoid both interest and fees, keeping your card balance in check and your finances in good standing.

Freedom to Select Payment Dates

With autopay, you can select a specific day for payments to ensure that they coincide with your income flow. Many people receive their salary at the beginning of the month, so setting autopay to debit payments a few days after payday can help ensure sufficient funds in your account. This way, you avoid both late fees and other charges that could result from insufficient funds.

Things to Keep in Mind

In conclusion, autopay for credit cards is helpful for those juggling multiple financial obligations or who find it challenging to keep track of various due dates. With this simple setup, you reduce the risk of missed payments.

(The author is CEO of Bankbazaar.com)

Disclaimer: The views expressed are personal and do not reflect the official position or policy of FinancialExpress.com. Reproducing this content without permission is prohibited.