Q: I read your advice on being smart when paying credit card bills. You said you can pay your credit card bills online every two weeks and pay down the balance faster. You said this would also improve my credit history and credit score.
How do I set this up so my credit card company takes my payment right out of my checking account? Do you call the customer service department of the company and give the check routing information? Or, is there an easier way?
A: Just as you can prepay your mortgage, and save thousands of dollars in interest, you can also prepay your credit card debt, saving hundreds or thousands of dollars over the life of the loan.
And if you learn how to pay your bills online, you not only streamline the process, but best of all, you save the 37 cents you’d pay to send the bill in the regular mail.
Here’s how you set up an online smart payment for a credit card bill. First, pay a visit to your credit card company’s website: Discover.com, AmericanExpress.com, Visa.com, or MasterCard.com.
Each website has similar rules on how to make a smart payment online, although each site is set up a little differently and is a bit quirky.
For example, Discover requires me to log in to the account center while American Express wants me to first click on whether I want the Small Business Dashboard or something else. Discover card will allow me to do one online smart check per week (so you could make four payments per month). American Express doesn’t seem to have this limitation, so you could make a payment every day (although it will be confusing for your record-keeping).
No matter which credit card you have, you’ll need to create a login for the site. Then, type in the information for the checking account from which you want the cash withdrawn to make your payment. The website will walk you through the steps. The set-up should take less than 10 minutes, especially if you have all of your information handy.
Once you’re all set up, every time you want to make a payment, you simply log onto the site, click on “make a payment” or whatever the equivalent is on your credit card company website, type in the amount you wish to pay, click OK and presto, you’ve made a payment.
The site will give you a confirmation of the amount of the payment as well as a confirmation number. I copy these and paste them into my palm pilot, so I have an electronic confirmation of the date and date on which I made my payment, just in case something goes wrong. (It never has, by the way.)
Another plus is that you’re able to make a payment the same date the bill is actually due. (Check your own credit card’s website for the time by which you must make the payment on the due date to have it credited by that day.) The obvious benefit is you have complete control over your cash and can keep it in your bank account until the very last minute.
It also eliminates the possibility that you’ll pay late because your payment got lost in the mail (or you mailed it only 2 days before it was due). Late payments are not only expensive (you’ll get hit with a ton of fees), but it can also damage your credit history and lower your credit score. And if you have a lower credit score, you won’t be offered the best credit card deals or most advantageous mortgage interest rate on home loans.
When you get more comfortable with paying your bills online, you may want to have your credit card company start sending you your bills electronically. It saves trees, you’ll get your statement faster, and you’ll be protecting yourself further from identity theft (which often happens when snail mail gets stolen).
Q: A reader recently asked what would happen if he sold his investment property to his renters. In particular, he was concerned about what, if any, action the lender might take.
You suggested in your answer that an installment sale might be used because it would allow the property remaining in the present owner’s name. However, you did not mention that the lender would then have the right under the standard “due on sale” provision in virtually every mortgage to call the loan due.
Just a thought from your friendly neighborhood Ohio real estate attorney.
A: Thanks for pointing out that mortgage lenders, in this situation, may have the right to call the loan (that is, demand you repay it immediately), although not every lender will do so.
Still, it’s a risk every investment property owner should be aware of. It’s a good idea to check with your lender to see whether the due-on-sale clause will be triggered before closing on an installment sale.
Thanks for reading the column and taking the time to write.
Jan. 19, 2009.