Monday, October 20, 2008

Don't overpay!

Let's face it, there's not one person on this planet that enjoys paying bills. Most bills are complicated and include a number of surcharges, fees, and taxes. By not reading and understanding your bills you could be overpaying by hundreds of dollars each year. How do you know if you're being charged fairly? From utilities to cell phones, billing can vary greatly and it's important to understand the charges you incur each month. Learn some of the basics of billing so you can avoid unfair charges, overages, and late fees.

Taxes, Fees, and Surcharges
Understanding the differences of each of these terms will make it much easier to read your bills. State and local taxes are applied to all sorts of bills and services. The most common services that have taxes applied are gas, oil, and electric. Often, these utilities are taxed by both state and local organizations. Generally, tax on these types of bills is no more than ten or fifteen dollars and the company does not make a profit on any of the tax applied. All taxes have to be approved by the county, state, or municipality.

Surcharges and fees are totally different than taxes and may be applied to your bills for a number of reasons and the company almost always profits. You may pay monthly connection fees, delivery fees, and premium surcharges. These extras can really add up if left unchecked. Always read your bill to find out exactly what you are being charged for. Any fees and surcharges should be explained and if there is not an answer, or the answer provided does not make sense you should question it. For most services provided, for which you receive a monthly bill you can simply call customer service to have the charges explained to you. If you don't agree with a charge you may be able to dispute it or receive a refund.
Interest and Late Fees
By only making the minimum payment on your bills each month you may not actually be paying your bills. Instead, you may be only paying on the interest which means the original balance never changes, even if you've made several payments. This is one of the most costly ways to pay bills because it will take much longer to get the balance paid off. This can be quite common on high interest accounts like personal loans and credit cards. When possible you should pay in full and pay on time to avoid recurring interest charges.

By not paying on time you will also incur hefty late fines. Late fees can range from just a few dollars to over thirty dollars each time a payment is late. Make sure you know when your bills are due and pay them on time or early. You don't get any points for paying early but it does ensure your bills are always paid by the due date. Considering electronic processing usually takes a few days you should pay early to avoid mistakenly paying late. One or more late payments may also be enough to kick your account into a higher interest rate, which in the long run will end up costing you much more.

Bill Summary/Detail
This is often the most important part of the bill because it defines the exact cost of your monthly charges. Always read this section of your bill to make sure you are being charged appropriately. If there are any discrepancies call the issuing company right away to get it worked out. Although it can be frustrating talking to machines and representatives it is never helpful to curse, yell, threaten, or demand that you get something. Politeness really pays and the calmer you are, the more likely the company is willing to make a compromise.

Payment History
When reviewing your bills you should also check to make sure the payment history is accurate. Some payment information may not be available immediately but when it is available make sure it matches your records. By keeping track you may avoid overpaying, and missing payments or making them late.
Communication Bills
Cell phone, Internet, and cable bills are usually about the same each month and do not vary greatly. If your bill dramatically increases it is likely there has been a mistake or you incurred a lot of extras. Always read your bill to find out what you are being charged for. Text and picture messages, long distance phone calls, ordering movies, and getting premium channels can always make your communication bills more expensive. By not adding these things to your plan you may be spending a lot of extra money each month. If you send a lot of messages via text on your cell phone you may want to consider getting a text plan. The same goes for cable extras like pay per view and premium channels which cost more when bought individually. Instead of paying full price, you can get a package deal that is much more inexpensive in the long run.

Oil, gas, and electric are expensive to begin with and paying extra charges may seem outrageous. Many utility companies offer balanced billing or some sort of plan that allows you to make more consistent payment amounts. Instead of paying $400 this month for oil and only $70 next month you can even out your bill and pay a steady amount each month. You will have to ask for balanced billing when it comes to utilities because most companies prefer a full upfront payment at time of service. Getting a utility contract may also help curb costs by reducing or eliminating delivery and service fees.

When reading your utility bills check to see how much energy you are actually using and what price you are paying. The cost of utilities can vary from month to month and may fluctuate with seasonal markets. Before paying any utilities make sure that a company representative actually comes and reads the meters each month and is not charging you based on estimated usage. You should only pay for what energy you actually consume. Unfortunately, in most places you have to pay supply charges and/or connection fees.

Other Information
On many bills there is a section where announcements are made and important phone number are listed. Most people fail to read this section of the bill which may alert them to rate increases, new surcharges or fees, and changes to or interruption of service. If you are unaware of what's coming in the future you will be shocked later on when you get a larger than usual bill. Stay on top of things by fully reading your bill and paying attention to your charges. It pays to be proactive and in the long run you will save money.

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