January 6, 2022
With our busy schedules and what seem like an abundance of bills, it’s easy to forget when all our different payments are due. One way you can keep on top of this is by setting reminders on your phone or recording it in a diary to avoid losing money simply because a bill was due, and you didn’t have enough funds in the relevant account at that time to pay it. Fees for failed direct debits can add up over time varying between $5-$75 per transaction – so a little planning can go a long way in helping you save in the long run.
The growth of the ‘buy now, pay later’ industry has been exponential in the past few years, with companies such as Afterpay, Zip Pay and LayBuy being just a handful of businesses responsible for the 6.1 million open accounts as of June 2019.
While the lure of buy now, pay later may seem attractive and like a smart way of managing your money over say, a credit card or personal loan, many people find themselves unable to pay these bills and end up being stung with late payment fees. A 2020 report by ASIC found that 21% of buy now, pay later users who they surveyed had missed a payment in the last 12 months, with some even having to cut back on essentials such as meals, to try make these payments in time.
Late payment fees differ depending on the company; Afterpay for example charge a $10 late fee, along with an additional $7 if an account remains unpaid for seven days for an item costing less than $40. For orders of more than $40, the maximum late fees are capped at 25% of the order value, or $68, whichever is less. When you add up all these fees it’s easy to see how getting stuck in the cycle of buying things now and paying for them later can, in the end, cost you much more than you had planned.
In June 2021, there were 13,305,154 credit cards in circulation in Australia. The average balance per card was $2,935 and took around 6.5 months for most people to pay off. If the current median interest rate for a standard credit card is 19.94%, that’s over $300 just in interest payments you’d have to part with over the 6.5 months it takes most Aussie’s to pay off their credit card balances.
To avoid paying interest, you can set up an automatic monthly direct debit transfer from your bank account before the payment is due. To do this, you’ll need to know the day that your credit card bill is due and have sufficient funds in your bank account.
If you are unable to pay a bill on time, reach out to your service provider and negotiate for hardship support. Don’t suffer in silence. If you have a portion of the money due, talk to your provider and let them know how much you can pay by the due date and when they can expect the balance. If you contact them before the due date, you’ll find most will be willing to hold off on charging late payment fees, especially in today’s climate.
It can be financially overwhelming when receiving large bills such as quarterly gas and electricity, or annual car insurance payments. To avoid the financial stress and help ensure you have the funds to cover these bills, make smaller monthly, fortnightly, or weekly payments. Not all providers offer this option – however most gas, electricity and car insurance providers will set up an instalment payment plan if you take to the time to ask.
Payble lets you take control of bills before they even become late payments – all within a single app! It works by letting you scan a QR code on a bill or email and linking this bill with your bank account. You can then set up recurring direct debit payments, as well as receive reminders when bills are due. It will notify and prompt you to top up or change the linked bank account if there are insufficient funds – ensuring your bill payment can always be made on time. If you don’t have the funds to pay, Payble can even help you activate payment plans. Want to know more? Register your interest now!
Important: Any information provided is general in nature and does not take into account your personal needs, financial circumstances or objectives and you should consider whether it is appropriate for you.
Although we are learning to get on with life and doing business. So, before we end 2022 (not a typo), please ask yourself these three things…
Every year in Australia more than 75 million recurring or scheduled bill payments fail or are paid late – that’s 15% of all bills issued!