Putting Off the Credit Card Bill Can Result in Late Fees and Charges
One of the reasons many people find themselves in debt is because they procrastinate when it’s time to pay their credit card bills. Someone may not feel like making the payment when the bill comes in the mail. Instead, he sets the bill aside for later. Other responsibilities get added to the “to-do” list, and the bill gets lost in the shuffle. This type of procrastination can lead to rapidly accumulating credit card fees.
Self-control and procrastination used to be strange concepts to economists, but are now topics of growing interest by behavioral economics theorists
— Richard Thaler, Save More Tomorrow: Using Behavioral Economics to Increase Employee Saving
When your bill comes there is a credit card grace period, usually between 10 to 20 days, before interest charges kick in. You also have a credit card bill due date. That’s the day your payment needs to be received. If you are late making your payment, you are charged late fees. Credit card companies charge between $25 to $45 (or more) for a late payment.
Once you miss the credit card grace period, get charged a late fee, are billed for interest and are assessed other fees, it’s easy to see how you accumulate your credit card debt.
This can be especially discouraging for those who have enough funds to pay off their credit card balances (or at least their purchases) each month. If fees are added to your card, it becomes more difficult to pay it off. And, because your credit card fees are added to your balance, you have to pay interest on them, too. This only compounds the problem.
It is very important to overcome the inertia, or tendency to stay in one state, associated with paying the credit card bill. If you are in a state of procrastination, it is easy to continue to procrastinate. However, you need to overcome this.
It’s best to pay your credit card bill as soon as it comes in. And the payment needs to be sent well in advance so that it arrives in advance of the due date (and before the credit card grace period ends). This way you will not be charge late fees. All credit cards, even the best student credit cards, can be dangerous if you have a tendency to procrastinate.
Next: Why We Get in Debt, Part 5: Unrealistic Optimism
Previous: Why We Get in Debt, Part 3: Cumulative Cost Neglect
All posts in this series:
Why We Get in Debt, Part 1: Behavioral Economics and 5 Types of Apathy
Why We Get in Debt, Part 2: Lack of Self-control
Why We Get in Debt, Part 3: Cumulative Cost Neglect
Why We Get in Debt, Part 4: Procrastination
Why We Get in Debt, Part 5: Unrealistic Optimism
Why We Get in Debt, Part 6: Keeping Up with the Joneses
Why We Get in Debt, Part 7: Know Yourself and Your Limitations
