Meaning? Someone who pays a credit card bill late every month, and only pays the minimum, is paying almost half of their bill to late fees.
How can you avoid late fees? You have several options.
• Look for a bank or credit card that promotes no late fees. There are a few out there, as some credit cards and banks are realizing they might be able to attract customers by getting rid of late fees. For instance, Citi Simplicity is the only credit card, according to Citi Simplicity, that never charges late fees, penalty fees or an annual fee. So what happens if payments are never made? A company spokesperson who didn't want to be identified said information would eventually be sent to the credit bureaus – so no late fee doesn't mean never make a payment, but if you continually miss the deadline, there is no fee and the interest rate won't rise.
[See: 8 Painless Ways to Save Money.]
• Talk your way out of the fee. Sure, everyone suggests this, but Gary Frisch, a public relations professional and regular bill payer in Laurel Springs, N.J., takes the advice to new levels. "I've called as many as three times before finding someone who will credit me the fee. Or speak to a supervisor, and stress your loyalty and long history as a customer or card holder," Frisch says, but he adds: "Threatening to cancel your card usually does no good, because the rank-and-file rep or supervisor probably doesn't care, and once you go down that route, you might be cutting off your nose to spite your face."
• Set up automatic withdrawals. But be careful. If you're living paycheck to paycheck, you could easily find yourself in overdraft at the bank, which can be even more expensive than a late fee.
• Always pay everything on time. Well, that is one way, yes.