Autopay Ends Credit Card Late Fees

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Credit card companies usually set small-dollar minimum payments, so there’s really no excuse for incurring fees for late card payments.

Yet many consumers fail to pay on time. In a new study, British researchers found a no-brainer solution that is highly effective: setting up automatic payments of our credit cards.

The researchers started out with a different premise: that customers might learn, over time, to prevent maddening late fees after having to pay them numerous times. The researchers roundly rejected this after following nearly 250,000 U.K. credit card holders over two years.  When it comes to late fees, we do not learn from our mistakes.

What they noticed, however, was a clear distinction between card holders who incur late fees regularly and those who don’t or who stopped incurring the fees.   Setting up autopay “all but eliminates the likelihood of future [late] fees,” while the probability remains “persistently high” (about one in five) among people who did not, they said.

Further, a seemingly obvious explanation for chronic late fees didn’t hold water: that people don’t have the cash to make their minimum payments.  Payers of late fees “do not appear to be liquidity constrained,” the study found. Apparently, most people simply forget to pay those pesky credit card bills.

Consumers have various options for automating their payments, either through their bank or card issuer. In one method, bank customers direct the bank to process an estimated minimum payment well before the statement’s due date. Most major card companies offer the option to pay the minimum, a percentage of the amount due, or the full balance on time – the downside is giving card issuers the right to reach into one’s bank account.

The beauty of online banking is that much of our financial lives can go on autopilot. So try it.

Wallet Hub predicts Americans are on pace to end the year with more than $1 trillion in credit card debt. Rather than worry about recurrent late fees, another foolproof solution is to pay off the debt.

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Anyone who doesn’t have the discipline to pay bills on time and avoid late fees isn’t going to have the discipline to keep track of their accounts to insure that they aren’t being overcharged.

No way am I giving any creditor the keys to my bank account.


I strongly believe our mind-set about money affects the way we handle money and that is what is at play here. Most people who continuously incur late payment fees really need to change the way they think about money in order to develop good money habits.

Cassandra Holt

I’ve been doing credit card auto-pay for approx. 13 years. I wouldn’t have it any another way. Putting my expenses on auto-pilot simplifies my finances. I agree with the author, the CC debits are always accurate and I don’t have to worry about late fees or due dates. This is especially important because I do a lot of travel and don’t want to access financial websites away from my house. Auto debit ensures bills are paid on time. Simplify your life and place CCs on autopay!

Donald Mayfield

I have a quicken split transaction set up to be paid on the proper date and avoid lateness status. I keep it current with use of the card by adding a new line each time I use the card. The only time I have been late is when I misread a payee and paid the wrong payee. (I renamed it so that doesn’t happen again.)

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