The consequences of a delinquent account can be far-reaching on your finances. To avoid having an account labeled as delinquent, keep up with all your payments – and act quickly if you ever miss one.
Here are a few strategies to avoid late payments on your credit accounts:
1. Set up autopay and reminders
Juggling all your monthly bills and various due dates can be challenging. One way to ensure you never miss a due date is to set up automatic bill payments.
Just make sure you have enough money in your checking account to avoid overdraft fees, or switch to an account that doesn’t charge overdraft fees.
If you don’t like the idea of online bill pay – or want to make sure you pay more than just the minimum payment on your credit card – you can still manually make your monthly payments. Set up reminders on your calendar, phone, or physical planner to ensure you never miss a payment.
2. Create a budget and stick to it
By creating a budget based on your income and necessary monthly expenses, you’ll better understand how much you can spend each month. If you stick to this budget, you should always be able to afford your monthly bills – and keep your accounts from going delinquent.
If you’re routinely spending more money than you bring in, examine your budget and determine which expenses you can cut out. Prioritize groceries, utilities, rent or mortgage payments, and other necessary expenses, and try to cut costs like gym memberships, streaming services, and dining out.
3. Reduce your credit card spending
If high credit card bills make it challenging to keep up with monthly payments, avoid swiping your credit card when possible. Instead, use your debit card. That way, you’re only spending money you already have, and there aren’t any stressful bills at the end of the month.
Using your credit card less often can also help you improve your credit score. That’s because credit utilization – how much available credit you actually use – impacts your score. By using less of the money you’re allowed to borrow, you’re showing lenders that you’re responsible with their money, and your score will reflect that.
4. Consolidate your debt
Managing multiple sources of debt – whether it’s personal loans, medical debt, or high-interest credit cards – makes it easier to miss a payment. After all, you might have to memorize several different due dates.
See if you can consolidate your debt into one single monthly payment instead. This will make it harder to miss a payment and could ultimately save you money if you get a lower interest rate.
Debt consolidation loans are an excellent strategy for this. You’ll get a lump-sum payment through a personal loan, pay off all your outstanding debts with the cash, and then make one monthly payment on the personal loan instead.
5. Call your creditors
If you’re falling behind on payments, contact the creditor before your account becomes delinquent. Alerting them to your situation will make them more likely to work with you on a solution. Creditors want to avoid writing off the debt as a loss, just as much as you do.
6. Build an emergency fund
Start building an emergency fund with every paycheck. Even if you can only put $25 or $50 a month into a high-yield savings account, it can add up and help you with any emergencies down the road. Which means you might not need to rely on your credit card.
And the less you swipe your credit card – especially for those unexpected expenses – the less likely you are to miss a payment!
