Timing is everything when it comes to paying your monthly bills. Knowing when to pay recurring household expenses can help avoid late fees, reduce interest, and meet financial goals.
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“Bills are like houseplants,” said Jason Hishmeh, an entrepreneur and tech investor. “Ignore them too long, and they’ll cause a mess. Nurture them on schedule, and they’ll thrive without much fuss.”
According to experts, this is the best time of the month to pay all your bills.
Beginning of the Month
Brian Seymour II, CEO and founder of Prosperitage Wealth, said he advises clients to start with the largest bills, like the mortgage, and build a strategy around it to ease the cash crunch.
“Once we have a handle on the larger, fixed expenses like mortgage payments, the next step is to stagger and adjust the due dates for other bills,” Seymour said. “Car insurance, daycare, utility bills, and other expenses that may align at the start of the month put significant strain on cash flow. However, with a little effort, many service providers are open to adjusting payment due dates.”
In addition, Seymour recommended clients who are paid bi-weekly should set aside half of their mortgage payment with each paycheck to balance the burden of large bills over two paychecks.
“People who are paid biweekly receive 26 paychecks a year, but only 24 payments need to be made for a mortgage,” Seymour said. “That means that two paychecks can be redirected toward other financial goals.”
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By the 5th Day
Renters should check their lease agreement to see when payment is due. Late payments usually begin within five days of the due date.
“However, if you’re dealing with a private owner, there’s more flexibility if you communicate with them about not being able to pay on time,” said Ali Zane, CEO of Imax Repair Firm.
“Monthly rent is not reported to the credit report unless you’ve requested the credit bureaus to report it.”
Zane said, “However, a collection could be reported to your credit report if you have a past due rent bill for several months or if you’re evicted.”
Mid-Month
Mortgage payments are generally due on the first of the month with a 15-day grace period before the late fees start.
“Plus, you’re given 30 days before a late payment is reported to your credit report,” Zane said. “So, it’s best to make sure the mortgage lender receives your payment by the 15th of the month.”
Five Days Before
Zane said the best time to pay your utility bills is about five days before the due date to process the payment and avoid late fees.
“Some utilities may offer a grace period of 15-20 days after the due date before imposing late fees,” Zane said. “Check your statement or user agreement to make sure.”
In addition, Zane said utilities offer more leeway in credit reporting. A late payment won’t affect your credit unless the service is disconnected and the account goes to collection, which generally takes months.
“So, if you are low on funds, and want to prioritize bills, a utility bill can be paid two to three months late without negative credit reporting consequences,” Zane said. “The exception here is if you’ve asked a website like Experian to report your utility bill payments monthly.”
Three Days Before
Daily compound interest can grow pretty quickly on credit cards, which is why it’s best to pay them before the due date.
“At the very least, pay your bill by the due date to avoid those nasty penalties,” Hishmeh said. “But if you’re really trying to maximize your savings, pay off your balance in full before the statement closes.”
Hishmeh said paying off your balance before the due date helps to keep your credit utilization rate and reflects well on your credit score.
“A low utilization rate shows lenders that you are responsible with your money,” Hishmeh said.
“What if cash flow is tight? Paying promptly after payday ensures that you don’t accidentally spend money you intended to use to pay down your credit cards.”
On the Due Date
Subscription services can be paid on the due date or several days after.
“They generally don’t have late fees, and they mostly dont reportto credit bureaus,” Zane said. “However, they may halt your service until they receive payment.”
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This article originally appeared on GOBankingRates.com: This Is the Best Time of the Month To Pay All Your Bills
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