While delinquency rates remain below historic records, they have been climbing.
Data from Experian shows that delinquency rates over all types of personal loans in the USA have increased over the past few years. Meanwhile, FICO has observed similar increases in delinquency rates in Canada. These numbers reflect the slow creep of global delinquencies as consumers all around the world struggle to pay bills on time.
These rates aren’t at critical levels yet, which is good, but this news offers a good reminder.
Paying bills on time is one of the most important things you can do, saving you from late fines, added interest, and credit damage. Here’s what you can do to ensure you’re never late paying important bills.
Rate Shop Before You Borrow
You lay the foundations of good money management long before you ever get your bill. It starts when you first start looking for a personal loan, line of credit, credit card, auto loan, or mortgage.
Shopping around includes checking out several lenders at a time, comparing their rates and terms and picking the best ones. While you have to qualify to get the latest rates on a line of credit or personal loan, applying with intention can save your budget. You avoid accepting terms you don’t understand or fees that compound your costs.
This critical step before you borrow can help you choose a more affordable option that fits your budget, right off the bat.
Use a Budget to Prioritize Bills
Like many people today, bills only represent a portion of the expenses you pay in any given month. With your paycheque pulled in so many different directions, it’s easy to accidentally spend the money you need for something else.
A budget helps you avoid making this mistake. By making one, you are forced to list all your expenses, essential and non-essential. At this stage, you can flag the essential bills that need urgent attention and make a note to pay these before you splurge on the fun stuff.
Automate the Essentials
You’re a busy person with a lot going on in your life. It’s not always easy to remember when a bill is due or whether you’ve sent the money already. If you run into trouble keeping track of these dates and payments, consider automating your bills.
Autopay is possible through your bank. All you have to do is set your creditors as authorized payees and establish a payment rule. This includes assigning a schedule (monthly, bi-weekly, or weekly), transfer dates, and the amount you want to send according to this schedule.
Once there’s a rule in place, your bank will automatically transfer the appropriate funds according to your pre-determined schedule for each bill with an authorized payee.
Set Analogue Reminders
While the majority of your bills are fixed, regular expenses — these bills come with a predictable bill each month, and the amount and due date never change — you will have other bills that fluctuate. Your utility bills, credit cards, and lines of credit may vary depending on your usage.
A fluctuating bill can be hard to automate, so you need to set analogue reminders to ensure you don’t forget to send money. Set up reminders on your phone to send multiple alerts or sign up for reminder services from your creditors to receive text messages and emails about upcoming bills.
A simple reminder may be all it takes to avoid an annoying missed bill. But the other tips shared here today — from rate shopping and budgeting — will help you avoid regular delinquencies despite the growing trend.