Generally, a problem arises when we have to pay back the outstanding credit card payment to the bank but we miss the last date by chance and a large late fee is charged on our monthly statement. Surely, you may not want to go through such a situation where unnecessary charges are being cut from your account. Nobody likes to pay extra.
Richard Crone, CEO of Crone Consulting LLC, said that his credit card issuer offers many types of credit card alerts, such as emails, text messages or push notification via issuer’s app. He thinks such features are an enough reason to choose one credit card over another. These alerts help you monitor all the authorized as well as unauthorized activities that take place in your credit card account.
There are different types of alerts offered online by different issuers. You can choose the type of notifications that you want to receive from the credit card account settings. It’s a better option to call and confirm about the offerings before applying for the product.
The author of “The Debt Escape Plan,” Beverly Harzog said, that it’s better to find out the available benefits and take advantage of them because that is what can protect you and help you stay financially stronger.
Please note that the alerts are offered free by the issuers, however text messaging and internet charges may apply to you. So please call your network carrier to know about the various charges before you sign up for the notifications.
Let’s check out 4 different ways how credit card alerts can help you save some money:
Pay on time
Missing credit cards payments can be very costly for you. Very high late fee charges are applied, usually in between $25 to $35.
Missing payments causes a drop of 70 to 90 points on your credit score based on the current score, which can be very expensive in future financing. So you can say that missing a payment can mess up your credit.
You can always check your credit score freely at myBankRate before you apply for a new credit card.
To be on safer side, you should setup different alerts like payment due alert which will alert you the number of days you selected before the payment date so that you can keep your money ready on time to prevent late fee charges.
Secondly, you need to setup the payment received alert to get the confirmation that they received your payment on time. And the most important is payment past due alert which warns you about the minimum payout you forgot to pay on time.
Don’t worry if you forgot to pay your minimum payout. Just call the issuer and explain the reason why you forgot to pay on time. If your payment history is well maintained, and it’s for the first time you missed your payment then you have a chance to get a pass and you won’t have to pay any kind of interest or late fee charges, reveals Harzog.
Become a watchdog of your spending
Issuers are now giving you a chance to monitor your spending by setting up spending alerts, which will send you a message whenever a purchase is made from your card.
You can also ask your issuer to notify you when you exceed certain amount of dollars which you set as your threshold amount. Daily or weekly alerts are also available as an option which will tell you about the balance and with these regular alerts, you can control your expenditures.
These alerts can be helpful in maintaining credit utilization ratio if you’re worried about your credit score. Credit utilization ratio represents the debt you carry vs credit extended by you. The rule of thumb is to keep your credit utilization rate under at least 30%.
Hence, alerts are your money management tool which make you aware how much you’re spending every time.
Spot fraud immediately
Setting up your spending alerts at zero amount notifies you every time when a transaction is made and hence helps you monitor unauthorized payments.
Bruce McClary, vice president of public relations and external affairs with the National Foundation for Credit Counseling, said that all the alerts that are meant for your card play a very important role in protecting you against identity thefts.
You can also setup alerts for every payment made outside the U.S. or without card that is any kind of purchase done online or using a phone.
If you receive any alert of a transaction that you never made then immediately call the issuer and raise a dispute against the unidentified transaction in your account.
You can also opt for issuers that have secured the transactions with one-time password on your registered mobile phones and sometimes you get an alert to accept or decline the transaction. So, you should choose your issuer that offers high security on transaction so that you can have the control in your hand.
Protect your reward points
Nowadays, many credit cards issuers give you rewards points, miles or even cash back on every purchase that you make from their credit cards which get collected in your credit card account and can be redeemed when you have a nice collection of points.
McClary says that many issuers offer alert services on rewards program in order to help the cardholders track their rewards transactions. Monthly alerts can be setup or when rewards points are used the holders are notified about the transaction to help them protect their earned rewards.
Always opt for text or email alerts whenever you have a cash back credit card to get notified about the various offers or discounts before they expire.
Remember a rule of thumb: Rewards are beneficial when you pay your outstanding amounts on time and don’t get looted by the interest or late fee charges on the amount you spent.
Also remember that you should sign up only for those alerts which you will definitely use because the more alerts you opt for, the more lightly you will take them and one day you may start treating them as spam which can drill down your important alerts.
Still looking for more? Feel free to check out our comprehensive personal finance guide to learn more about managing your budget and staying financially healthy.