For the most part, I’m proud of the characteristics my mom, sister and I share. My mom’s generous, friendly and kind, and I like to think her daughters take after her. But there’s one thing we have in common that’s not something I’m particularly proud of: All three of us have made a late payment on a retail credit card — the same retail card in fact!
For me it started with a back-to-school shopping trip at Kohl’s with my daughter where we found amazing deals. We made our way to the cash register with a couple of shopping carts full of clothes. Normally I say “no” when a sales clerk offers me a credit card to get a discount, but in this case I did the math and felt it made sense. Plus Kohl’s is known for sending great coupons to cardholders, and based on that successful trip, I anticipated we’d be back.
Sure enough, when the holidays rolled around I took advantage of a coupon offered to cardholders and made some holiday purchases. I logged onto my account a couple of weeks later to pay the bill, but no statement was available yet.
And then I forgot about it.
A few weeks later I received a call alerting me my payment was overdue. I paid it immediately, but I was assessed a late fee and interest. I was annoyed and irritated at myself. I don’t normally pay bills late.
Then my sister recounted to me how she had a similar experience. During a busy and stressful time in her life, she forgot to pay her Kohl’s bill, and they charged her a late fee. Annoyed, she paid all of the balance except the late fee, and tried to get it waived. Kohl’s wouldn’t budge. By the time she begrudgingly paid the fee, it had been reported to the credit bureaus. It’s the only negative mark in her otherwise perfect credit history. “I’m still paying for it,” she says ruefully.
Shortly after that I helped my mom check her credit report and to our surprise it listed a single late payment. You guessed it. It was on her Kohl’s account. She wasn’t sure what happened, but since my Dad normally handles the household bills it probably was overlooked.
Our story should serve as a warning: Retail cards can be a great way to snag special deals and discounts, but if you use them infrequently, it’s all too easy to forget about the bill and make a late payment.
Payment history is the most important factor when it comes to personal credit scores and one late payment can cause credit scores to drop significantly.
How to Avoid a Late Payment
One solution (the one I chose) is to set up autopay, which allows you to have your payment automatically deducted from your checking or savings account. I set it up so I wouldn’t accidentally miss a payment on that account again — at least as long as my checking account remains open and there is enough money to cover the bill. But I know plenty of people who don’t like to use autopay because they don’t want an unexpected withdrawal from their bank account, which can result in an overdraft fee if there isn’t enough money in the account.
Recently, my sister shared that she is still shopping at Kohl’s. (Despite her annoyance, the deals were too good to pass up). But she had learned a secret for making sure she’d never make a late payment again. After she hesitated to pay with her Kohl’s credit card, a clerk at the cash register shared a tip with her. Once you make your purchase, you can pay it off immediately. My sister pays it off at the cash register using her debit card. She says JCPenney also offer this option and there may be other retailers that do as well.
It seemed so obvious, but I had never thought of it. And I’m supposed to be the credit expert in the family!
If you shop with a retail card and don’t want to pass up a great discount, you probably already know a late fee and interest can wipe out those benefits. This strategy can save you money, as well as protect your credit rating. (You can keep an eye on your personal and business credit scores for free on Nav.)
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