When it comes to paying your bills, we’ll admit: There is no quick fix. It takes preparation and diligence to ensure that everything is in place when it’s time to click that “PAY NOW” button. However, there’s no way around paying bills — it’s got to be done. You might as well make it something that you’re really good at. If you’re looking for how to pay your bills on time, what you do before and after paying a bill is just as important as paying the bill itself.
Before You Pay Your Bills
While doing a lot of up-front work to pay your bills might seem like a waste of energy, it’ll actually save time in the long run. Many of the things that you can do ahead of paying bills will only need to be done once, not every time you pay one. With a little work and preparation now, you can eliminate a great deal of stress and money waste for years to come.
Make a list of your bills
Mortgage, rent, car payments, insurance, daycare expenses, phone bill, cable, internet, utility bill, gym membership, streaming services, monthly and annual subscriptions, credit card payment, student loans, and other loan payments — round them up and write them down. According to BillGO, the average U.S. household pays about 12 bills each month. With so many expenses to keep track of, it’s no wonder they slip through the cracks.
Keep a paper or digital list of all of your bills, as well as when they are due and their amount, which may be an approximation for irregular bills that fluctuate from month to month. Using this list, you can also refine or kickstart your budget if you do not already have one.
Don’t become part of the statistic that pays $17 billion in late fees on bills every year. doxo estimates that 54% of U.S. households get stuck with one or more late fees every year on bill payment, which boils down to approximately $132 per household. If you cannot pay your bills immediately after receiving the bill, set up manual or digital reminders so you can remember to pay your bills by their due date. By setting up reminders, you can avoid costly penalties, interruptions to your service, poor marks on your credit report, and significant damage to your credit score.
Your payment history accounts for 35% of your credit score, the single largest contributor for credit scoring agency FICO. If you miss several payments, you’ll end up with far more issues than a couple of fees. Late payments can stay on your credit report and affect your score for up to seven years after the original delinquency. During this time, you could end up spending hundreds or even thousands of dollars more than you need to on interest and other missed opportunities.
Organize your bill-paying space
Half the battle with bill pay is often just locating the bill — whether you’ve tucked it into your junk drawer (everyone’s got one) or have to sift through your email. Organize your desk and paper bills if you pay bills manually, or organize your computer folders and email inbox if you prefer to pay a bill online. If you have a tidy space where it’s easy to find what you need, it’s likely that you’ll feel more compelled to sit down and pay bills when the time comes.
Reorganize your due dates
Contact your various billers and ask if you can move your bill due dates to a certain day each month. Not all billers offer this service, but many do. For you, it might help to have all of your bills come out at the beginning or end of each month. You might prefer to have two different due dates that align with your paycheck schedule and allow you to space out your major expenses. Find a payment schedule that works for your financial situation.
Set a bill-paying date
Once you’ve worked out a schedule, set the date. Mark it on a calendar in your home or set up an alert on your mobile device. When setting your bill-paying date, make sure that you mind arrival and processing times. This is especially important for payment methods that are not immediately received by your biller, such as if you pay your bills with cash by mail.
If you have a credit card payment, you should keep a couple extra things in mind. Be aware of your credit card’s grace period — this is the time between the end of your billing cycle and the bill’s due date. During this time, you will not accrue interest. Try to pay off your credit card balance in full during this time to avoid carrying a balance over to the next month. You may also want to dedicate more than one day per month to paying down your credit card balance. This can help you maintain a lower credit utilization, which helps your credit score.
Review your bills
Once you receive the bill from your service provider, study it. You may catch costly mistakes or additional financial products or financial services that you did not sign up for. Now is the time to negotiate them, before you make the payment.
You should also confirm that your bills contain up-to-date information, such as new addresses or contact information. Out-of-date information could cause you to miss a bill if you do not receive it and incur a late fee.
While You're Paying Your Bills
When the time comes to sit down and make the payments, there are a couple of things that you should keep in mind.
Decide how you will pay
Cash, credit card, debit card, ACH, online bill pay, over the phone, by mail — there are a number of ways that you can pay regular bills. Each comes with their own set of pros and cons. Take credit card payments, for instance. Paying bills with a credit card through online bill pay can be a good way to earn rewards, track your spending, and make the most out of a new card. Unfortunately, when you pay your bills online with a credit card, you also should always pay your balance in full and may have to deal with pesky convenience fees. Plus, not all billers accept credit cards as a valid form of payment. Many lenders — such as mortgage lenders, for instance — do not accept credit cards due to processing costs.
If you pay by mail, try to get a tracking number from your mailer so that you can ensure the payment arrives at the correct place and time. It’s up to you to decide the most convenient, cost-effective payment method for your finances.
Monitor your bank account
Immediately before submitting your monthly payments, check your account to ensure that you have enough money in your account to cover the payment. If there isn’t, you may need to transfer funds from another account or wait until there is enough money in your account. If you set up direct deposit, you can access funds as soon as your paycheck hits your account.
Immediately after submitting the payment, check your account again to confirm that the payment has gone through or is at least marked as pending. A technical issue may block your payment, which could potentially lead to late payment fees from your biller.
Check your budget
Refer to your budget. Does the amount that you’ve been charged align with the amount that you’ve allocated to that bill for the month? If not, you may need to adjust your discretionary spending for the rest of the month. You may also use this as an opportunity to negotiate down your costs with the biller before the next one hits your mailbox.
After You've Paid Your Bills
You’ve successfully paid your bill — congratulations! Unfortunately, your work is not over. There are several things that you can do after the fact to set yourself up for success before the next bill comes.
Continue to monitor your bank account
We may sound like a broken record, but it’s not possible to check your bank account too many times. Even after your payment has gone through, it’s a good idea to make sure that you’ve been charged the correct amount, or that you haven’t been charged more than once. That’s a quick and easy way to run your checking account balance into the ground.
Decide if automatic payments are right for you
You’ve submitted this payment, but was it a little too tedious and time consuming for your liking? Consider setting up autopay for your bills. Autopay can make bill payments cheaper and more convenient. However, it also gives you less control over what’s coming out of your account (and when), and it can lead to just as many bank fees.
Automatic payments do not work for everyone, nor are they suitable for every type of bill. Some bills that you should consider paying manually include utility bills, phone bills, and subscription services. By paying for these types of bills manually, you can check for inaccuracies, identify dangerous or costly issues within your home, and reconsider whether you need the service or product at all.
Reconsider your costs
After paying your bills, you may be thinking to yourself: Do I really need that? Gym memberships and subscription boxes are the common culprits, but perhaps the same goes for cable TV or one of your many streaming services. It may be time to cut the cord, and if not completely, consider downsizing, either to fewer screens or a less expensive package.
Even if you don’t want to eliminate entire services, you shouldn’t underestimate the power of negotiation. If costs have gone up since you first joined the service, reach out to your biller to see if you can get a rate decrease. When you call your service provider, have your name and account number ready to ensure the process goes smoothly.
Make sure payments are reported to credit bureaus
Not all billers report payment history to the credit bureaus, but some do — including lenders, credit card companies, and even some utility providers. These companies should automatically report your information to the credit bureaus, but if you’re serious about proactively boosting your credit score, it doesn’t hurt to confirm that your on-time payments have been recorded.
While you shouldn’t look at your credit score as a number that defines you, the fact of the matter is that credit scores affect a lot of your personal and financial life. A good credit score can get you better rates and terms, access to better credit cards with lower fees, lower insurance premiums, and make you a stronger candidate for jobs and rental opportunities.