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Late Payments, Grace Periods

New Contributor

Late Payments, Grace Periods

Say someone pays 1 day or 5 days after the payment due date. Is there a grace period before they report to credit bureaus? I do not like autopay and now that I have a few more cards rather than just one I worry about "what if" I overlook something.

 

For example I once had a joint car loan with U.S. bank and through a divorce the car loan had to be in the ex's name. Lack of caring on the ex's part ran the issue down to the wire. Like, the day a payment was due the loan issue was finally paid off by a car dealership and a different car was obatined. I called US BANK before all this and if I recall correctly they seemed to have some sort of grace period.


EQ 812, TU 817, EX 798
Message 1 of 9
8 REPLIES
Frequent Contributor

Re: Late Payments, Grace Periods

Many years ago, my mortgage had a grace period. In my ignorance I thought the grace period due date (about ten days later) was the actual due date. After a couple of years of paying by the grace period date, I was in for a very ugly surprise; Extra interest, late fees, and reporting late payments on the CR. Luckily, that was years ago.


Message 2 of 9
Valued Contributor

Re: Late Payments, Grace Periods

What's wrong with autopay? If the issue is that you don't trust yourself to have enough funds in the payment account to cover, at least setup autopay to pay the minimum in case you forget to make manual payments.
Message 3 of 9
Established Contributor

Re: Late Payments, Grace Periods


@ch3ckerwrote:

Say someone pays 1 day or 5 days after the payment due date. Is there a grace period before they report to credit bureaus? I do not like autopay and now that I have a few more cards rather than just one I worry about "what if" I overlook something.

 

For example I once had a joint car loan with U.S. bank and through a divorce the car loan had to be in the ex's name. Lack of caring on the ex's part ran the issue down to the wire. Like, the day a payment was due the loan issue was finally paid off by a car dealership and a different car was obatined. I called US BANK before all this and if I recall correctly they seemed to have some sort of grace period.


A late payment is only reported to the CRA when it is 30 days past due.  So you really have to miss two payments before it will show on your CR.  A late fee however can be charged as soon as you are late. 


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Message 4 of 9
Valued Contributor

Re: Late Payments, Grace Periods

It's not just the late fee you have worry about even if it's not reported to CRAs, a penalty APR will also most likely be applied and the late payment will stay on your internal profile with said bank which will have negative effects on your future dealing with the bank, like CLI requests...etc.
Message 5 of 9
Regular Contributor

Re: Late Payments, Grace Periods

+1 Oldman. A few years ago with GM Financial, it was late fee after 10 days. They only report after 30 days past. But you bet your a$$ that they wouldn’t finance a roller skate after that.
Message 6 of 9
New Contributor

Re: Late Payments, Grace Periods


@oldman87wrote:
What's wrong with autopay? If the issue is that you don't trust yourself to have enough funds in the payment account to cover, at least setup autopay to pay the minimum in case you forget to make manual payments.

You know?, I never even considered autopay for the Minimum Payment which is never over $50 on a single card since I always pay the full balance every statement. I just have a lack of trust in the automatic system doing stuff correctly....

 

Addressing my fears:

- I worry the systems will "accidentally" pull a payment even if I paid the entire month's statement a few days prior

-I worry about autopay dates changing without notice (I am controlling)

-I'd like to ensure only the minimum due would be pulled in the case I "forget" to manually pay the full balance. I would worry about only the minimum being pulled.

 


EQ 812, TU 817, EX 798
Message 7 of 9
Valued Contributor

Re: Late Payments, Grace Periods

I think you worry a little too much, everyone of my bills (including CCs) except for home owner association fee (monthly bill pay) has been on autopay for years, the only problem I ever had was with Cap One executing the autopay after I had paid the statement balance and more prior to due day (experimenting with AZEO), they grabbed and paid the remaining charges I had planed to post to the next statement, with CapOne you have to either edit the autopay amount or cancel autopay first then reset after the extra payment.

 

Other than that, autopay has made my life easier and less stressful, I have a monthly auto transfer from one of my savings to the checking account to cover monthly expenses, I also have overdraft protection for the checking linked to the same savings just in case, I can literally be kidnapped by aliens for a year without any problems because everything is automated.

Message 8 of 9
Frequent Contributor

Re: Late Payments, Grace Periods

My system for the past 15 years has been to pay all my bills weekly instead of monthly. I don't ever worry about or factor in due dates at all. I just pay if I have balances on the day I check my accounts. I find this is also extremely helpful for budgetting and controlling spending since I can course correct much sooner than if I only did my finances once a month/cycle. And of course there's plenty of wiggle room this way. Occasionally I'll be busy, stressed out, or lazy when my weekly bill day comes and I'll decide to skip it.

 

I understand that weekly bills don't work for everyone, but in that case why not try for twice a month instead? Maybe just always do all your bills on the first and the fifteenth for instance. I personally think that checking and paying an account at least twice a month is a pretty low bar of effort and it would eliminate any concerns about late payments. Failing all that, why not just consider your due date a week or so before your real due date? If it's really the 12th, swear to yourself up and down that it's actually the 2nd and always act as if it's the 2nd. If the worst happens and you miss your 'due date' you'll still be in your own self-created grace period.

 

Bottom line: Your due date doesn't have to be the day you pay your bills. Pick an arbitrary day ahead of it, IMO ideally more often than once a month and stick with it.

 

I know some people will argue that they're 'throwing away money' by paying bills early because they lose the benefit of the float and the potential value in interest or investment the funds could have created...but in practice this is usually a triffling amount of money, and IMO just not worth worrying about.

Message 9 of 9