Avoid Late Fees by Paying Credit Card Bills by Phone or on Internet
Question: Would you please discuss the pros and cons of paying credit card bills by phone? Some credit card companies charge high fees for this service, and they require you to give out an awful lot of information over the phone.
Answer: Credit card companies have different approaches to payments by phone. Some require you to set up the transaction in advance; others allow you to pay your bill on the spot.
If the company requires advance registration, it will send you a form, which you fill out with your checking account number and other information, before returning it by mail.
The company lets you know when your account has been set up to allow telephone payments. After that, you can make a payment using a touch-tone phone in just a few seconds.
Some companies, however, eschew all this and let you sign up on the spot. Once you’ve properly identified yourself, the biller asks for your bank’s routing number (which is on the bottom of your checks), your checking account number, the number of the check you wish to use and the amount you wish to pay.
You don’t fill out or mail in the actual paper check. Its number is used just for this transaction. You should destroy the actual check or write “void” on it to make sure you don’t use it again.
Some people feel nervous about giving out so much information over the phone. But if you initiated the transaction and you’re dealing with a reputable company, this can be a convenient way to pay bills.
That is, if the process is free. Some credit card issuers have decided the people who are most likely to pay by phone are procrastinators trying to avoid a late fee. So they charge $3 to $5 for the “service,” figuring people would rather pay that than a $29 late fee.
That’s a pretty hefty price to pay for convenience, especially when you have other options. You can switch to a credit card issuer that doesn’t charge fees for payments by phone--there are plenty of them out there.
You also can ask your credit card issuer to help you set up an automatic payment, so a certain amount--either your minimum payment or a set dollar amount--is deducted every month from your checking account. That will prevent late fees, and you can always send additional amounts by mail.
In addition, you could explore one of the many Internet bill-paying options. Many credit card issuers allow you to pay your bill on their Web sites. Other Web sites allow you to pay a variety of bills, including your credit cards. Yahoo’s BillPay has free bill paying with a number of major credit card issuers. Before you use any bill-pay service, be sure to read its privacy policy.
Paying bills by phone or Internet isn’t for everyone, but many who use these methods swear by their ease and convenience.
Credit Rating Not Hurt by Blocking Card Offers
Q: You recently provided a toll-free number--(888) 5OPT OUT--so people could opt out of credit card solicitations. When you call the number, however, it seems to indicate that you are blocking screenings by credit bureaus. The implication of the recorded message is that one’s credit rating could be adversely affected by “opting out.” Is this accurate? Or can one opt out with no adverse consequences?
A: No, your assumption is not accurate and yes, of course, you can opt out of credit card solicitations without hurting your credit rating.
Call that number and listen to the message again. You’re being given the option to have your name excluded from the prescreened lists of consumers that credit bureaus sell to credit card companies and other marketers.
If you ask not to be included on those lists, you don’t affect your credit report. Should you apply for credit, the lender still will be able to review your credit history--you can’t opt out of that. But you can opt out of being deluged with credit card offers, which is what this service is all about.
In an indirect way, you might even be saving your credit rating. Thieves sometimes steal credit card offers, open accounts fraudulently and fail to pay the bills, which can hurt the credit ratings of the victims.
IRS Help Is Just a Phone Call Away
Q: I read with interest the column about late IRS payments. The letter writer said she paid her taxes on time but was still charged a substantial penalty by the IRS, which said her payment was received late. The same thing happened to me and it was solved surprisingly easily. I called the toll-free number for the IRS, (800) 829-1040, which is listed in the blue pages of the phone book. I was on hold only a minute or two and a very nice lady helped me. It took several weeks for the whole matter to be resolved, but it was all done on the phone. And I learned my lesson--next year, my return and check are going by certified mail.
A: Thanks for sharing your positive experience with the IRS’ toll-free help line. Though not all tax problems can be solved on the phone, you’re right that it’s a good place to start.
But this works best if you’re willing to be calm, patient and reasonable. If you feel a deep need to pick a fight with the IRS--as the original reader apparently did--it’s probably best to hire a tax professional to act as your go-between.
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Liz Pulliam Weston is a personal finance writer for The Times. Questions can be sent to her at moneytalk@latimes.com or m ailed to her in care of Money Talk, Business Section, Los Angeles Times, 202 W. 1st St., Los Angeles, CA 90012.
