This post assumes that you are not living paycheck to paycheck and have money in the bank to cover your bills as the come in. If you don’t have some money saved up yet keep working and remember to apply this when you have some cash in the bank.
So you have money sitting in the bank and you get a bill. What do you do? In order to get the most out of your money (assuming there isn’t a discount for paying early) you should pay the bill on the due date. This will allow your bank account more time to accrue interest on the money.
This is how I used to pay my bills when interest rates were 3, 4 or even 5 percent but with today’s 0.8 percent interest rates the extra interest I get for waiting a couple weeks to pay my bills just doesn’t justify the risk of making a late payment or forgetting about a bill.
How Paying Bills on the Due Date Can Backfire
If you wait until the last day to pay your bills you run a lot of risks that ultimately will cost you more than the pennies you will likely earn for waiting. The first risk is that when it comes time to pay your bills the money simply isn’t there to pay it. Uh oh… somebody made a boo boo… This happens happens a lot if you aren’t on a budget and thinking ahead.
You might have misjudged the total amount of all of the bills you have to pay or maybe a surprise bill came up. Regardless of why it happens if the money isn’t there you can’t pay your bill.
If you’re like me you throw your mail all over the house and don’t look at it again for a few days (if not a few weeks). Flat surfaces attract paper, junk and other things. When you finally get around to cleaning it up… DARN IT… I forgot to pay that bill. That or your spouse/significant other cleans the house and doesn’t even notice the bill is in the stack and throws it away! If this happens you’re in a whole mess of trouble. What kind of trouble you ask?
You Will Have To Pay A Late Fee
Yup, if you pay your bill late chances are you’re going to incur a late fee. Most late fees will eat up multiple years worth of interest at today’s rates. If that isn’t enough to convince you maybe the next point will.
Your Interest Rate Could Go Up
I guarantee if you’re interest rate goes up on a loan or credit card because of a late payment it is going to be a heck of a lot more than that 0.8 percent you are earning yearly for a few days in your savings account. Multiply this out by the life of the loan and you’re talking some serious cash.
Your Service Could Be Cut Off
Forget to pay your cable, internet, land line phone (I still have one), cell phone, electricity, gas, water or other service related bill and they can cut your service off. That would be a nasty surprise when you don’t wake up the next morning because your alarm clock doesn’t go off due to a lack of electricity. I hope you don’t lose your job for being late…
The Bill Could Get Sent To Collections
Is this the second notice you received to pay that bill because you threw the first one away? Do it again and it might go to collections over a measly $10 copay you need to pay your doctor. Totally worth a few cents of earned interest.
You Credit Rating Could Get Dinged
If you’re excessively late and your debt goes to collections your credit score WILL get dinged. This leads to higher interest rates on all subsequent debts to the tune of thousands of dollars over your lifetime.
Well there you have it. Those are the reasons I pay my bills when I get them. In my mind the cons of waiting greatly outweigh the pros in most cases. Especially when your interest rate is a measly 0.8%.
Do you pay your bills when you get them? If not, are you going to start?
An accountant by day and blogger by night, Lance is the owner of this site. 
As of right now I’m kind of, sort of living paycheck to paycheck. But I have everything budgeted every two weeks and have it worked out so that bills and rent typically get paid a few days ahead of time if not a week or so.
bogofdebt recently posted..No more dentist appointments!
I know we’re different than most simply because of how we budget and how long we’ve been doing this, but we definitely pay bills as soon as they come in. If you looked at my budget the dates associated with each bill having nothing to do with “due dates”…they’re all projected dates of about the time I know the bill will arrive.
Jason @ WorkSaveLive recently posted..Recipe: Tacos With If You Can Cook, You Can Read Taco Seasoning
Great tips! I had a client who made high six figures who hired me for one reason: she kept forgetting to pay her bills and her credit was horrible. We set up automatic payment systems and she paid all other bills that came in every other week.
I pay bills NEARLY the day they come in. We have a basket by the door. Bills go there and on Sunday we have a family meeting where we look at them together.
AverageJoe recently posted..Creating Lucky Investment Picks
I use online banking. I schedule payment of my bills as soon as I receive the invoice or statement. My only exceptions are bills (medical bills) I pay by credit card. Since I live on less than I earn, there is no problem scheduling bills weeks away.
krantcents recently posted..What Should You Do?
I pay a couple of bills on the 15th of each month…the rest are automatic. I’ve also got a little chart on my bulletin board that shows the bills I have to pay for each month.
Brent Pittman recently posted..10 Free College Savings Calculators
I agree. It’s ALWAYS best to pay your bills right when they arrive… OR… set them all up on auto-pay, like I do. As long as you have the money, and I understand that many people don’t always, it’s best to make absolutely sure that they are all paid early so that there won’t ever be any problems.
Kraig @ Young, Cheap Living recently posted..How to Handle Stress at Work
I pay my bills automatically with my credit card (always on time, and cash back is a beautiful thing)… unfortunately, I tend to forget the ones I can’t pay with credit, which does back fire some times
Luckily those which I can’t pay with credit don’t carry a late payment fee, they just roll over to the next month and throw my cash flow off…
Joe Morgan recently posted..Credit Card Debt Down, Defaults Up.
Great post. We have actually set it up where we have the majority of our bills on auto pay or auto debit. This takes away the worry of ever missing a payment or paying them late. It works really well.
Miss T @ Prairie Eco-Thrifter recently posted..Amazing Workplace Perks
Now that I get some bills on email, some are paid automatically and other obligations don’t even bill lme, I’m kind of chaotic around the bill issue. I need a better system to organize. DAre I admit I like the good old days when they all came in the mail and I could touch them and organize
Barbara Friedberg recently posted..SHOULD YOU INVEST IN REAL ESTATE NOW? Quick and Easy Ways to Invest in Real Estate-(Part 2)
I sign up for auto pay with many of the companies that I have bills with so that I avoid the late charge thing. I do this because I save my expenses monthly and earn a very little extra income each month. It’s not much, but since companies allow you to earn money off your bills, I take advantage of it.
JP @ My Family Finances recently posted..Frugalistas Know Better Than Income Over-Acheivers
I try to autmoate my bills as much as possible so that I don’t forget to pay them. In an effort to go green, I went paperless so I get email reminders when my bills are updated, but I never checck my email. Woops!
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