Can you pre-pay credit cards?

prepay credit cardsYes, you certainly can. Pre-paying your credit card bill is one of the best ways to cut down on interest rates and prevent late fees. Paying early also helps improve your credit score.

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You never have to wait for your bill to arrive in the mail before you submit your credit card payment, there are many ways to stay ahead of your due date. You can register online with your credit card company and establish a user name and password.

If you are not familiar with your current billing cycle, contact customer service before you register your account. Once you gain access, you can review your history, track your transactions, and, of course, pay your bill. The benefit to having an online account is you have more control and can spot errors much faster.

Another option is to review your previous credit card statement and take note of your billing address, billing cycle, due date, and minimum amount due. Write all of this information down and put it somewhere safe, but easily accessible. Whenever you are ready to make your credit card payment, you can write a check anytime. Use the billing address and send. The payment will post quickly and you will receive confirmation on the next bill showing you paid early.

Over time, your credit card companies report your history to all three credit bureaus, TransUnion, Experian and Equifax. This includes your payment history, current balance and other data.

Each credit card payment that is recorded as early shows the credit bureaus that you are responsible. Just as making late payments can cause your credit score to drop, early payments can cause your score to increase.

Can I pre-pay my credit card bill with a debit card?

credit cards that you prepayYou may be able to pay your credit card bill with your debit card, because a debit card is attached to a savings or checking account and is considered real money, not a loan. Your credit card company may offer this option but you will need to check with them. If they do allow this method of payment, you should inquire about automatic-deductions; this will help you remain current with your bill.

You may also be able to utilize prepaid debit cards that are loaded by direct cash deposits. Most pre-paid debit cards are not attached to bank accounts, but they are also recognized as money because the cash must be added and available before use.

What is the penalty for paying credit cards late?

In addition to negatively affecting your credit score, paying your credit card late carries other penalties. For example, companies assess credit card late fees and over the limit fees, especially if your balance is at the maximum and you have missed your payment.

While the Credit Card Act of 2009 did curb excessive fees, if you are making late credit card payments, you will not be protected. Your credit card company can charge you as much as $35 per month each time your account falls past due. The over limit fees will also be valid until you have made enough payments to bring your balance within limits.

The credit card company also has the right to penalize you further by freezing or closing your account completely. If you are consistently past due more than 60 days, they can shut your account down and demand a final payment.

If you cannot pay within a timely manner, they have the option of sending your information to a collections agency or writing off the loss and informing the credit bureaus; both are detrimental to your future credit history.

What should I do if I know my credit card payment will be late?

As soon as you know you will not be able to make your monthly credit card payment, call your provider right away. Hopefully, you have a decent history and they will offer you some options, especially if you can provide them with a promise to pay date. If you can pay within 30 days and keep your agreement, they may not assess you any late fees.

Some credit card companies still offer payment arrangements. They may be able to give you lower monthly payments for a few billing cycles in an effort to collect something from you. If this happens, you must not miss one single payment. They will certainly revoke their offer and late fees may begin to appear. The last thing you should do is ignore your situation. It will not improve unless you act.

With so many issues brewing over the past few years, it is understandable that you want to take better control over your personal finances to avoid credit card pitfalls. This is why it is necessary that you fully understand your obligations and responsibilities.

The agreement you make with your credit card company must be upheld or consequences can result. You may not have the opportunity to pay your credit card monthly payments in advance consistently, but, take advantage when you can. This is the easiest way to stay one step ahead of debt and negative credit ratings.

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