MONEY credit cards

The Latest You Can Pay a Credit Card Bill Without It Going on Your Record

time expired on parking meter
Mie Ahmt—Getty Images

Credit bureaus follow this standard reporting guideline

It’s irritating to run across a bill and to realize it was due yesterday… or last week. If it’s a credit card bill, you may also have to pay a fee (sometimes, if it’s a rare slip-up, you can get it waived), and it can be especially scary to find an overdue bill if you have applied for credit or plan to in order to make a big purchase, like a house or vehicle. Readers often ask us how late a payment has to be before their creditors report it to the credit bureaus:

  • From Ig08: Hi, I have my credit card since last 6 years and have never missed any payments, but my last payment was due on 4th may and I paid it on 6th. … Does being one/two days late affect credit score?
  • From INVNOONE: Today [my bill] is 30 days late. When I called my bank they stated, “we cannot tell if it has been reported to the credit bureau.” Should I pay the loan today not knowing if they already reported it late to the credit bureau? This will leave me with very little money but I do care about my credit report.
  • From Stephen: I have perfect credit and a small business and my credit is very important to me. I had a credit card … I thought it was completely paid off there was a $6 remaining balance I paid it in full and it was 31 days late and they put it on my report what kind of options do I have?

First, know that even if a late payment does make its way onto your credit report, it’s not necessarily the end of the world. There are many, many worse things, and there are degrees of lateness. Ninety days late is worse than 60 days, and 60 is worse than 30, for example. One late payment among years of on-time payments is far less serious than a late payment and limited credit history. (Of course, if you are in the middle of applying for a mortgage, one late payment could be a serious setback.)

Chi Chi Wu, a staff attorney with the National Consumer Law Center, said 30 days is the magic number. “Late payments generally don’t show up until the payment is 30 days ​past due,” she said in an email. “This is the standard reporting guideline for the credit bureaus.”

But one of our readers who goes by the screen name AJ says she was just 14 days late on a car payment, and it showed up on her credit reports. She hasn’t been able to get it removed. Rod Griffin, director of public education for Experian, said that because it was a car payment (rather than a revolving account, like a credit card), “the ’30-day grace period’ doesn’t necessarily apply.” He added that the payment was late as of the due date, “so the lender may have reported it immediately. You should always be sure to understand the lender’s policy for reporting late payments for the account.” he said. “The commenter should review their contract with the lender to determine what it says regarding when late payments will be reported, or contact the lender. The lender should be able to explain its policy. The 30-day period is specific to revolving accounts, not installment loans.”

If a credit card payment arrives before it is 30 days late, it generally should not be reported negatively or have any effect on your credit score. Beyond that time, however, it’s a distinct possibility that it will. You can get a free annual credit report from each of the three major credit reporting agencies. That can show you whether you have had late payments reported. (This guide can help you interpret those reports.)

If it turns out your late payment has been reported, know that its impact on your score will diminish with time (especially if it’s an isolated event), and that other on-time payments can help counter the effects of a slip-up. And, as with almost any other mistake, the sooner you realize you’ve made it and try to fix it, the less likely it is to turn into a big problem.

More from Credit.com:

MONEY Budgeting

Here’s Why More Americans Are Saying ‘I Do’ at City Hall

Couples head toward the Historic Dade City Courthouse to say their marrige vows.
Zuma Press—Alamy Couples head toward the Historic Dade City Courthouse to say their marrige vows.

It may be the best wedding gift of all.

When Scott Oeth was thinking about proposing to his girlfriend, Linda Hardin, he knew the stats. The average wedding costs in 2014, according to popular website The Knot, were a whopping $31,213.

That’s when the Minneapolis financial planner thought, No way.

Lucky for him, his bride-to-be was thinking exactly the same thing. So last year the couple arranged for a courthouse wedding, a celebratory dinner at their favorite steak house, covered as a gift by his new in-laws, and a backyard BBQ reception later in the summer for 100 guests.

Total cost: A paltry $1,250.

Oeth, 43, says he wouldn’t change a thing. “It was all wonderful, and we had such a great time,” he says. “I don’t think that most people who spend tens of thousands on traditional weddings could say the same.”

More newlyweds seem to be thinking like Scott Oeth and Linda Hardin. Courthouse and city hall ceremonies now account for between 3 and 4 percent of marriages, up from 2-3 percent a couple of years ago, according to industry resource The Wedding Report.

Financially speaking, toned-down weddings make a ton of sense. After all, think of all the other places newlyweds could spend that money to get their marriage started on the right financial foot, Oeth says.

Fully funding IRAs for both spouses. Paying off high-interest credit cards. Getting rid of student debt. Starting a 529 college-savings plan for young children. Saving up for a down payment on a first home.

“Expensive weddings are like a subprime mortgage crisis of the heart,” says Laurie Essig, associate professor at Vermont’s Middlebury College and “Love, Inc.” columnist for the magazine Psychology Today.

Noting that most young people have student loans, Essig says, “It just doesn’t make financial sense to be taking out even more debt to have a lavish wedding.”

Those typical expenses, according to The Knot, include $14,006 for venue rental, $2,556 for the photographer, $3,587 for the band, and $555 for the cake.

In many urban centers, costs can be much higher than those national averages. In Manhattan, for instance, the typical wedding bill comes to a wallet-punishing $76,328.

Of course, it is no mystery why people are so willing to pay through the nose for their Big Day. Marriage is seen as a once-in-a-lifetime moment that couples want to memorialize with one spectacular day.

Forgoing Extravagance

When you think of financial alternatives to a fancy wedding, it is hard not to see the logic of forgoing the extravagance.

“Of course, it doesn’t make sense to spend all that money,” says Essig. “But marriage is a magic ritual, and magic will always outweigh more pragmatic stuff, like going down to city hall and filling out forms.”

Many spouses-to-be are afraid to bring up the idea of shaving wedding costs, for fear of appearing like a cheapskate, hurting their partner’s feelings, or angering in-laws at a highly emotional moment.

Get over that reticence and have a money conversation, experts say.

The so-called wedding-industrial complex may not like it, but there is no law against buying a used dress from a thrift store, or getting a vintage ring, or having the ceremony in a park instead of a grand ballroom, Essig suggests.

Even if your wedding is a quick and simple affair, always check local regulations beforehand, advises Christen Moynihan, editorial manager of the website Broke-Ass Bride. There might be waiting periods after acquiring a marriage license, or specific ID requirements for getting all the necessary approvals, and you do not want to be caught off-guard.

A ceremony in front of a justice of the peace might only run a couple of hundred bucks. “There was a time when low-cost weddings and courthouse ‘I Dos’ were scandalized, but in recent years there has been much higher acceptance for weddings to take place in whatever way the couple envisions,” Moynihan says.

Scott Oeth and Linda Hardin redirected some of their wedding savings toward a fabulous honeymoon on Kauai. Since they are cost-conscious, they bought a travel package through Costco and got free first-class flight upgrades because of Scott’s Delta Medallion status.

Total cost for the fairytale honeymoon? Around $3,000.

MONEY Health Care

Americans with Obamacare Are Still Afraid of Big Medical Bills

150521_FF_ObamacareBills
Walker and Walker—Getty Images

A new survey finds most Americans are satisfied with their Obamacare plans, but they're still worried about one thing.

Americans gave Obamacare plans high marks in a survey out today from the Kaiser Family Foundation. Three-quarters of those enrolled in health plans through the marketplace say they’re satisfied with the choice of primary care doctors, 73% express satisfaction with their doctor’s visit copays, and 65% say they’re satisfied with their premiums. Overall, 40% say they’ve mostly benefitted from the Affordable Care Act, while only a third say they’ve mostly been negatively affected.

But there’s one nagging problem. Even though Americans are generally happy with Obamacare plans, a large minority—38% of marketplace enrollees—say they still “feel vulnerable to high medical bills.” (A similar proportion of people in non-Obamacare plans agree.)

Most alarmingly, Americans enrolled in plans that meet ACA requirements are more likely to struggle with medical bills than Americans enrolled in plans that do not meet ACA requirements. Americans in ACA-compliant plans are also more likely to report skipping care because of cost. Even though the Affordable Care Act outlawed annual and lifetime coverage maximums—the health insurance provisions that saddled the insured with hundreds of thousands of dollars in medical debt and doomed the sick to bankruptcy—more than half of Americans enrolled in ACA-compliant plans say they’re worried they won’t be able to afford the health care services they’ll need in the future.

One culprit may be high deductibles. In a previous survey, the Kaiser Family Foundation found that Obamacare silver plan enrollees have an average $3,453 deductible, meaning they need to pay more than $3,000 out-of-pocket before insurance would cover part of the cost. On average, Americans enrolled in bronze plans need to pay more than $5,372 out-of-pocket before insurance kicks in.

Unsurprisingly, people with high-deductible plans, whether ACA-compliant or not, feel more financially vulnerable. Only 7% of Americans on high-deductible plans say their health insurance is an “excellent” value for the cost, compared with 19% of Americans on lower deductible plans. And fewer than a third of Americans on high-deductible plans say they could pay a $1,500 medical bill without borrowing money—which is a problem, because a $1,500 bill is a real possibility with a $3,000-plus deductible.

How to save on medical care:

MONEY Budgeting

Americans Spend More on Taxes Than Food, Clothing and Shelter Combined

hand pulling cash out of wallet
Getty Images

The surprising math on how we spend

Every year, the Tax Foundation compares the total amount of taxes paid in America and the amount of spending on the necessities of food, clothing, and shelter. In most recent years, the Tax Foundation has concluded that Americans spend more on taxes than on necessities — and 2015 is no different.

The Tax Foundation projections show a total of $4.85 trillion in taxes paid in 2015, divided between $3.28 trillion in federal taxes and $1.57 trillion collected at the state and local level. According to the Tax Foundation, total taxes are approximately 31% of the national income. Using data available from the Bureau of Economic Analysis (BEA), the Tax Foundation calculated approximately $4.3 trillion in spending for the basics with food at around $1.8 trillion, clothing at $0.3 trillion, and housing at $2.2 trillion.

Here’s the real question: Is this spending comparison indicative of a problem or of a correct and equitable tax structure? Should any of us be outraged? Probably not, although there are reasons for concern.

Certainly, the trend is not promising. The gap between taxes and spending on the essentials in 2012 was approximately $150 billion, rising to almost $300 billion in 2014 and around $550 billion in 2015. It’s hard to spin that as a positive development.

The Tax Foundation’s report also says nothing about equity of taxes and spending. Certainly, the Tax Foundation can leave the impression that taxes are too high for all Americans by using aggregate values. More progressive sites such as the Center on Budget and Priority Policies (CBPP) call these values misleading, pointing out that with our progressive tax system, poorer Americans clearly pay a greater share of their income for the essentials and less in taxes.

Meanwhile, the wealthy pay more in taxes and while they may make more discretionary purchases in food, clothing and shelter, it isn’t enough to make up the difference. Therefore the “average” (middle-class) American probably does not pay more in taxes than for the basics, and the lower income levels certainly do not.

This conclusion implies a higher amount of wealth transfer to help lower-income Americans with spending on their basics. Indeed, a graph created by the Tax Foundation shows a steady rise in transfer payments as a percentage of the cost of living, from 0.5% to nearly 35% in 2011. The Tax Foundation acknowledges some double-counting inflating the value, but the trend is still valid.

This illuminating graph and other explanations may be found in a 2012 article on the Tax Foundation website. For example, the amount spent on taxes was roughly equal to that spent on food, clothing and shelter from 1929 until the 1990’s, when the divergence began. Since then, taxes have increased disproportionately in a sawtooth pattern, with dips corresponding to economic crashes (2001 and 2007-2009).

If you have a budget — and you should have if you don’t — you can certainly figure out whether or not you paid more in taxes than you did in 2014, and can probably make a good estimate for 2015. What you do with that information is up to you.

You may well conclude that you pay too much in taxes, but use the exercise as an opportunity to analyze your spending on the basics. Are you getting the best value out of your dollar for your food, clothing, and housing payments? We’ll just ignore the subject of whether you’re getting your money’s worth out of your taxes. Save your outrage for that topic.

More From MoneyTips:

MONEY Budgeting

Living Paycheck to Paycheck on $75,000 a Year

couple paying bills in kitchen
Neil Beckerman—Getty Images

One-third of high earners get by this way.

If you are struggling to save money and think that a larger paycheck is the key to solving your problems, a new report suggests that may not be completely true. According to a recent survey by SunTrust SUNTRUST BANKS STI 0% , almost one-third of survey respondents making $75,000 per year or more live paycheck to paycheck on occasion, as do one-fourth of the respondents making over $100,000 annually. The secrets to saving are as much of a mindset issue as they are an income issue.

The survey, conducted by Harris on SunTrust’s behalf, polled 518 adult respondents (ages 18 and over) in households that brought home a combined income of $75,000 or more. One-third of those households cited insufficient financial discipline as a reason that they do not reach their goals. The survey does not say how much overlap that has with the percentage of people that sometimes live paycheck to paycheck, but it’s a solid bet that most high earners in a paycheck-to-paycheck situation have at least some lack of financial discipline.

The response to another question highlights the financial discipline aspect. Within the group that aren’t saving as much as they want to save because of their lifestyle choices, 68% said that expenses from dining out was the main reason for their lack of saving. The number was slightly higher among millennials (70%), but in general, this was true across the generations. Entertainment and clothing were also listed as reasons that saving was limited. These are all discretionary purchases related to fiscal discipline, regardless of income.

Do these results translate into long-term savings concerns? One-third of respondents living paycheck to paycheck say it probably does, and even some of those who are living more frugally have some concerns. Of the respondents from ages 35 to 44, 53% expect their savings will be adequate to help them live comfortably in retirement. Only 37% of those between ages 45 to 54 feel that way, suggesting that as one gets closer to retirement, either the optimism begins to fade or a realistic assessment of retirement costs sets in. Perhaps it’s a bit of both.

The survey is part of SunTrust’s efforts to get people to set positive goals, assuming that setting targets will help motivate people to save to meet those targets. The campaign plays on words by suggesting saving for “sunny days” instead of only for rainy days.

We think the folks at SunTrust are on to something. Fiscal discipline may be partly related to a lack of knowledge, but lack of willpower appears to be the largest culprit. Unsuccessful savings efforts fundamentally boil down to budgets. Either people aren’t making realistic budgets or they are choosing not to stick with them, and the SunTrust campaign is easing people into the concept.

Granted, it’s easy to accumulate debt through discretionary purchasing — but debt management is an important part of learning how to set a budget. If you have too much debt for the income you make, cut down on your spending and start paying down your debt. As you get used to the lower spending levels, transfer your debt reduction payments to some sort of savings.

Please consider following this philosophy if you are a high earner living paycheck to paycheck. It can be a difficult philosophy to follow, but it’s certainly not complicated. While we appreciate your single-handed efforts to save the economy with your discretionary spending, let the rest of us carry the ball for a bit.

More From MoneyTips:

MONEY financial advisers

Cleaning Up After Another Financial Adviser’s Bad Advice

broken piggy bank fixed with tape
Corbis—Alamy

Explaining to clients that another financial adviser has given them bum advice can be awkward. Here's how I do it.

Average Americans have a poor opinion about financial advisers, and with good reason. Too many “advisers” are just salespeople for products that generate commissions for the adviser but rarely deliver the promised investment returns to the client.

As a financial adviser myself, I often see unsuitable investments in prospective clients’ portfolios. I can’t just badmouth those clients’ current adviser. If I point out how this adviser has abused their trust, how are they going to trust me? What can I tell the prospect about another adviser’s bad advice without dragging myself down to his or her level?

Recently I reviewed the investment statements of a prospect family who owned about $1 million in assets in joint taxable accounts and IRAs. The IRAs were invested primarily in variable annuities. The family had already shown me that their retirement income needs were covered by pensions. Their primary interest was in asset transfer to their children.

There’s nothing wrong with variable annuities if used for the proper purpose. For example, clients may have already maxed out 401(k) contributions but still want to set aside additional cash in tax deferred investments. However, there is no reason, in my opinion, why you would ever put a variable annuity inside an IRA. There is no additional tax benefit, but there is an extra layer of cost and complexity and there is a loss of liquidity due to surrender charges. If you don’t like the investment returns of the annuity, it could cost you up to 11% or up to 11 years to get out.

There’s a wrong way and a right way to deliver bad news. The wrong way is a declarative statement along the lines of, “You idiots were totally taken advantage of.” The prospects tend to grab their papers and stomp out the door.

The right way is to engage the prospect in a series of questions and answers; that educates clients without making them feel stupid.

“Tell me about your thought process when you purchased these annuities,” I asked.

“Our broker explained that the annuity would grow tax-free with the stock market, and then at a certain point we could convert to a term annuity which would pay out a level payment for the rest of our lives.”

“Did he note that your assets are already in an IRA?” I asked. “Where growth is tax-free already?”

“No,” they replied.

“Did he tell you that you could also achieve growth by investing in a basket of mutual funds?”

“No.”

“Did he advise you that once you convert to a fixed annuity, there’s no residual value for your children?”

“No.”

“Did he explain that, because of the various fees loaded onto your investment, you were likely to have sub-par returns?”

“No.”

“Did he explain what the surrender charge is?”

“Sure!” they replied. “That’s the insurance company’s way of making sure we stay committed to the annuity.”

“That’s the marketing department’s answer to what a surrender charge is,” I said. “What the insurance company doesn’t tell you is that they paid a commission of up to 11% to your broker on the sale, which the insurance company amortizes over the next 11 years at one percentage point a year. So if you exit in year five, there’s still 6% of that 11% commission to recover, hence the 6% remaining surrender charge.”

By this point, the couple was looking distinctly uncomfortable.

“Look,” I said, “there may have been some other reason why he recommended this strategy. All I can say is that for the needs that you have described, I would have invested you in a plain vanilla basket of fixed income and equity mutual funds. We would have complete flexibility to adjust the asset allocation over time. If for some reason you weren’t happy, you could cancel your relationship with me with an e-mail, no surrender charge. We apply a monthly advisory fee to the assets in this plan, which is 1/12 of 0.75%. The fees you pay me are computed and disclosed to you in our monthly report. As your assets rise in value, so does our monthly fee, so no mystery about my incentives.”

Nobody likes to find out that their current adviser isn’t focused on their best interests — that is, a fiduciary. I provide information, let the prospects draw their own conclusion.

We turned to other topics, and I followed up with a formal investment proposal a few days later. I was not surprised that the family decided a few weeks later to move their accounts to my firm, nor was I surprised that the annuity accounts would trickle in only after the surrender charges had expired. Even though the family had concluded that they had received a raw deal from their current adviser, those annuities still were locked in for a few more years.

———-

David Edwards is president of Heron Financial Group | Wealth Advisors, which works closely with individuals and families to provide investment management and financial planning services. Edwards is a graduate of Hamilton College and holds an MBA in General Management from Darden Graduate School of Business-University of Virginia.

MONEY Love + Money

The Single Most Important Money Talk for Couples

The Voorhes

A new MONEY poll of millennial and boomer couples suggests that getting on the same page about your biggest money goal —retirement— leads to a happier and stronger union.

Married for 38 years, San Jose couple Carol and Ron Beck started getting serious about retirement in their mid-thirties. By that time, they had two kids and realized they needed to be thinking about their family’s future. So they set some savings goals, and continued talking about their plans in the years and decades that followed. Ron planned to retire around 65, and did. Carol is expecting to quit in the next two years. “We’re still deciding where we’d like to retire to,” Ron says. But even on that they have a good idea: a home near their daughter in Monterey, Calif.

There’s no question that couples need to plan together for retirement. In fact, since amassing the requisite amount of money will take time, retirement should typically be first on the list of priorities. “When it comes to goals, everything else comes next,” says Elizabeth Grahsl, a financial planner in Dallas.

A new MONEY poll of boomer and millennial couples suggests that we may need a little more help with this goal then we think. Some 79% of millennials and 91% of boomers surveyed say they are in agreement with their partners on saving for retirement. But MONEY also found that, among people who are married or living with a significant other, one in 10 boomers and four in 10 millennials don’t know their partner’s retirement account balance, while 14% of boomers and 40% of millennials don’t know when their partner plans to retire. That backs up a 2013 Fidelity poll that found that 38% of couples disagree on the lifestyle they expect, 36% on where they will live, and 32% on whether they will work. The costs of not being aligned are substantial: You could end up with less than you need at the finish line.

Here’s how you can avoid such a fate while strengthening your union and your finances.

Know your retirement wish lists. Since the amount of savings you need depends on your wants, create a “vision plan” together, says Brad Klontz, a financial psychologist and the author of Mind Over Money. Both of you should write down at what age you want to retire, where you want to live, and what you expect your life to look like. Do you want to stay put, downsize … sail around the world? “Come to the table with your dreams,” Klontz says. “Where you agree, it will be easy to adjust your finances because you are excited.”

Do a reality check. First, are you saving enough for the life you want? Check what your nest egg is on track to produce in annual income with T. Rowe Price’s Retirement Income Calculator, and see if that squares with your vision.

Second, keep in mind that retiring at the same time as your spouse typically isn’t the best move. Wives are often younger than their husbands, and women have longer life spans, so if a wife retires with her hubby, she’ll probably need to draw from their retirement savings for longer.

Also figuring into the equation are Social Security benefits, which make up 38% of income for the average retiree and which you’ll also want to coordinate with your spouse. One way to maximize benefits is to “file and suspend.” The higher earner files, then immediately defers benefits to let them grow (they rise 8% for every year you delay between full retirement age and 70). Assuming the lower earner is at full retirement age, he or she can then claim a spousal benefit, deferring his or her own benefit, which will also rise in the meantime. As you near retirement, run this and other basic scenarios using the benefits planner at ssa.gov or more detailed ones at maximizemysocialsecurity.com ($40).

Create a holistic plan. Make sure you’re acting as a team when it comes to saving and investing. If you’re a two-income household, you probably have access to two 401(k)s, for total annual tax-deferred savings of $36,000, or $48,000 if you’re both 50-plus. Stash at least enough in each to get the full company matches. If you can’t max out, sign up for automatic increases as your pay rises. “This is so basic it’s like breathing,” says O’Kurley, “yet a lot of couples don’t talk about it.”

You also want to think of your portfolio as one, and make sure you don’t have overlap or overexposure in your overall mix. The Instant X-Ray tool at Morningstar.com can help you figure this out. As a general rule, the percentage of your portfolio in stocks should be equal to 110 minus your age; the rest should be primarily in bonds. But if one or both of you have a traditional pension, you could adjust the bond allocation lower, since the guaranteed income allows you to take more risk.

Got several years between you or different tastes for risk? A UBS survey found that half of couples have divergent risk tolerances, but among them, those who choose an allocation between their preferences tended to be most satisfied. It’s also okay for the more risk-averse partner’s plan to be tilted toward bonds and the other’s to serve as a counterbalance in stocks, if that keeps the nervous one from overreacting to volatility. Another reason to split the baby: If your plan has lousy bond fund options, say, you could use your spouse’s plan to fulfill that allocation while using your 401(k) for stocks.

More from Love & Money:
Poll: How Boomer and Millennial Couples Feel About Love and Money
Why Couples Need to Get Financially Naked
This Is the Magic Number That Can Help Couples Avoid Money Fights

 

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