Most are aware of the convenience offered by online bill pay, but according to SMART Payment Plan, a premier online bill payment service, paying bills online is no one trick pony. With benefits ranging from improved credit scores to an actual increase in happiness, SMART’s secret method to better money management revolves around making smaller, more consistent payments.
It’s safe to say that no one likes to pay bills. So, the idea of using the words “bills” and “happiness” in the same sentence seems more like an oxymoron than a reality.
Yet, according to a 2010 PayItGreen study of 5,000 adults, researchers found a direct correlation between consumer satisfaction and paperless billing behaviors, with the top three reasons being easy online accessibility, clutter reduction and paper waste elimination. As online billing evolves, however, these perks are just the tip of the iceberg.
Automated payment providers like Smart Payment Plan take the simplicity of online bill payments a few steps further, generating even greater results for their clients. In the past decade, the nationwide payment service has enabled hundreds of thousands of people to reduce interest charges, improve budgeting, increase cash flow, and pay loans off faster, essentially increasing clients’ all-empowering credit score.
Looking to buy a home? Your credit score is a huge determinant in whether a seller would even consider you as a viable candidate in a pool of buyers, with potentially higher credits scores. Want to lease or purchase a vehicle? While many car dealers will work with people with a bad credit history, a poor score will largely increase the interest rate you’re offered.
Credit history is a reflection of one’s ability to budget and handle money. Essentially, bad credit means spending more money to get the things you need and want. This is precisely what makes maintaining good credit so important. The higher your score, the more trust others will have in your ability to make payments in a timely manner.
How it works
With SMART, clients create a payment plan that follows their specific payment schedule. Instead of making one large payment, in full, on the date the bill is due, SMART automatically deducts a smaller amount from each paycheck. So, for those paid biweekly, SMART will deduct two smaller amounts from each paycheck for the month, rather than leaving the payer with one huge bill at the end. This allows for better budgeting and enables clients to “set-it-and-forget-it”.
By making biweekly payments, clients essentially pay an extra full payment each year. Instead of one full payment a month, totaling 12 payments, clients make 26 partial payments, equaling 13 full payments each year. At first glance, this may seem like an unattractive factor, but according to SMART, the additional withdrawal comes with a multitude of financial benefits. In doing so, clients’ can pay off debts months, or even years, sooner and save countless amounts in interest.
According to a 2012 credit analysis released by Experian Automotive, more buyers with poor credit are scoring car loans, showing an increase of 11.4 percent. These loans are also getting bigger. While this is undoubtedly helping those with subprime credit lease and purchase cars, it is also putting pressure on them to make payments on time. SMART’s payment plans subside this pressure, creating a plan that suits their financial needs, helping them pay the debt sooner, while ensuring consistent cash flow as they go.
Plans such as those offered by SMART, are especially helpful for those living paycheck-to-paycheck. The amount deducted from each check matches the clients’ income, ensuring their bank account is not left dry mid-month. This paycheck-matching specialty ensures continued cash flow and a heavy weight off clients’ shoulders.
Boosting your credit
According to Anthony Sprauve of FICO, errors account for approximately 35 percent of any given credit report. So, before going through the ins and outs of how smaller, more consistent payments can boost credit, you should take it upon yourself to thoroughly check your report and contact a credit-report agency regarding any possible discrepancies.
Maintaining good credit does not mean paying bills all off at once. Building credit is the name of the game, meaning paying debts off in smaller increments can actually help reduce debt more quickly. By making smaller payments throughout the month, you basically lower your debt utilization ratio, which accounts for 30 percent of your credit score, explains Sprauve.
Most financial experts highly encourage individuals to align paychecks with payments and to take a biweekly approach, but of course, this is a lot easier said than done. Many people take it upon themselves to maintain a working system, but with the stresses of everyday life, it’s nearly impossible to do alone. According to Citibank, many people who try to set biweekly payments on their own fail to consistently keep up with their set plans.
This is where the promises of companies like SMART Payment Plan comes into play. Each plan is created for the specific financial capabilities of each client. If you realize you cannot make a payment at a particular moment, all you have to do is call 72 hours before the scheduled withdrawal. “Budgeting money is not a strong point for many people. With a little help and a proven system, people can rest easy knowing a set plan is in place that will not only help them make payments on time, but also help their credit score, which is a huge player in everyone’s lives,” says SMART Payment Plan.