Shrinking credit card float: One more reason to pay bills online

KANSAS CITY (11/27/07)--Call it the case of the shrinking grace period. Call it sinking the float. Call it deceptive. But whatever you call it, it's probably going to result in more consumers paying their credit card bills online (KansasCity.com Nov. 10).

More credit card issuers are shortening the grace period--the time in which you have to pay the bill before the interest-rate clock starts ticking--from 30 days or 25 days down to 20 days in some cases. That means your payment, if sent by snail mail, may not reach the issuer in time to avoid late payment penalties and possibly higher interest rates. Keep in mind, too, that you often rate a grace period only if you carry no balance.

With late fees climbing to all-time highs of around $39, and late payments triggering higher interest rates even on other forms of credit held by the card holder, consumers need to be on guard, monitor bills, and read the fine print on notices sent by issuers. Experts warn that some issuers hope you slip up and miss the due date, resulting in higher profits for them.

If you have a tendency to cut it short, there are two alternatives:

• Pay the bill when you get it. A 20-day grace period gets even shorter if it takes the bill two or three days to reach you.
• Pay the bill online. Avoid the snail mail shuffle that could cost you plenty in late fees and higher interest rates. Arrange for payment to be made two or three days before the due date and avoid the snail-mail shuffle altogether.

For more information, read, "Online Banking Makes Money Management Simple and Safe" in Home & Family Finance Resource Center.

courtesy of cuna.org