Budget effectively and avoid payday loans


By Peter Bravo

Not the most exciting topic but a key one none-the-less. Bills are a fact of modern life, we live in world of credit even if we don't have any loans in the traditional sense. Many utility companies work on an arrears basis where the customer pays monthly or quarterly depending on the amount of the service already used. So, you may not have a mortgage or any outstanding payday loans but you are still technically a debtor. With this fact in mind, we are all recipients of regular billing correspondence and general collections activity. When paying off your bills it's important to construct a schedule to track your regular commitments. A lack of organisation can result in an accumulation of debt, increased stress levels as well as a risk to your credit rating. As such, we all know that we should strive towards the goal of keeping up-to-date with bills and loan repayments. However, there are strategies to help you achieve this. This guide provides a series of tips to support you in reaching this goal, whilst highlighting some ramifications of failing to do so.

So, how can you ensure you pay off your financial commitments not only in a timely manner but also effectively and in a way that is efficient.

reminders to pay your bills

Get organised

Putting your bills to one side and piling them with others decreases the likelihood of remembering which have been paid and which are due. You can organise your bills and statements by companies, brands or the services they provide. This should make them more easily accessible and prevents any confusion should you need to refer back to them in the future.

If you would prefer to keep your home free from clutter, then another option is to arrange having your bills sent to you via email. This has the added advantage of allowing you to organise a set of folders, so that you can quickly filter through the type of bill it is and also whether or not the bill has been paid.

Keeping track of when your payments are due is an integral part of staying on top of your bills. Whether you invest in something that you can physically see to give you a visual reminder, like a calendar on your wall or fridge, or a digital one on your PC, laptop or phone (which, of course, allow you to set reminders as these dates approach). This can be an easy solution to ensuring you don't accidentally forget to pay a bill. Certain companies may be unforgiving about late payments, even if it is by just a day.

If setting reminders doesn't work for you, or you still find yourself forgetting about certain bills and missing payments, then consider paying them as soon as you receive them. Doing this will eliminate the possibility of late or missed payments, but of course this will depend on your budgeting cycles.

There really is an app for everything! There are many apps that can make managing your finances easier. They can assist you in a variety of ways, including keeping track of due dates for certain payments, meeting financial goals, restoring control after overspending and managing simple budgets.

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Reasons to pay your bills on time

Failing to pay your bills on time could result in the termination of the services provided, including vital services as electricity and water. To find out more about your water bill, visit the water regulator Ofwat.

Other measures used when you fail to make your bill payments include your account being transferred to a third party collections firm or possibly legal action. Either situation is stressful, which is why it is best to avoid these situations if possible. Before you reach this stage, consider the financial reasons as to why you should pay your bills on time:

Late fees increase the overall amount paid

Companies may charge penalty fees if you are late in repaying bills or loan repayments, which will increase the overall amount being repaid and reduce the amount of spending power that can be used elsewhere. If you are in financial difficulties the last thing you want to be doing is paying something for nothing.

Interest rates may increase

It is important to understand the terms and conditions of your contract with a lender. In some cases, missing payments could allow the lender to raise the interest rate on repayments. Bear in mind though that this is not allowed under the High Cost Short-term Credit (i.e. payday loans) rules set by the regulator.

Some lenders may forgive one or two late payments, but a regular occurrence may result in an increased interest rate. Likewise, some credit card companies may raise your interest or alter your financial terms based on a single missed payment. A higher interest rate will increase the overall total balance repaid across the lifetime of your loan or credit facility.

Negative impact on your credit report

Repayments that are overdue by more than 30, 60 and 90 days can be reported to credit bureaus and credit reference agencies by the creditor. These late repayments can negatively impact your credit report, which in turn impacts your ability to obtain credit, including payday loans.

Dealing with a call centre

Making a late payment increases the likelihood of having to deal with a collection agent on the phone, even if the payment is made prior to your account being transferred to the collections team. Dealing with these types of calls can be a real hassle, especially if you are having to use a call centre and deal with various different agents regarding your account.

Ask for a summary of all conversations to be emailed to you after the call and make sure you get the full name or call sign of the agent that you dealt with. That way you can ensure that there is a degree of accountability and ensure that any negotiating advantage is not lost further on down the line.

Loss of account benefits

Some creditors remove certain benefits from accounts when payments are late. This includes access to valuable services and rewards. These include; initial interest free periods, cash back bonuses and rebates. Whilst it can be difficult to be constantly on top of each and every bill, if you find yourself falling behind then it is best to resolve the situation as soon as you can in order to reduce the negative impact of late payments.

Payment methods

There are lots of ways to actually make a payment, however there are pros and cons with each:

You can use your debit card to pay a bill. Some banks can reward you for using your debit card regularly. Creditors do not usually charge a fee for debit cards but make sure to check.

Simple, often free and effective. Paying bills this way keeps you in control should something unexpected appear on your bill and you need time to investigate.

As with bank transfers, this method gives you control and flexibility to make payments on your terms.

This is a nice way of combining activities to make efficient use of your time.

This can be a great way of budgeting, as you only spend what you have pre-loaded helping you to keep track.

How to save money while paying bills

We can all agree that the period in which we pay off bills can be our least favourite time of the month or week. Some people find it time consuming and challenging to remember what bills are due and when. Here are a few tips that will save you time (and possibly money) when you're paying your bills:

Go paperless

Some companies offer the option to pay bills online or via Direct Debit. Direct Debit is where you grant a company permission to debit the cost of your bill directly from your bank account at a specific time every month. You will not usually get an invoice for this transaction, but you can usually check that it is going through online or by calling them.

Companies may also offer to send your bill via email, which will allow you to make your payments online. For those concerned about scams or theft, most companies will also offer secure websites to ensure the safety of processing your bills online.

Consider paying your bills by phone

You can still request a paper statement if you prefer being billed that way, however this will save you the hassle of writing cheques and it will allow your payments to be posted quicker. Paying by phone also offers the convenience of letting you make your payment on the day it's due, as opposed to sending it in the post days in advance to ensure that it'll be received in time.

Multipay by cheque

For example, if your water and electricity are supplied by the same company, consider writing one cheque for the total amount. In this scenario, however, be sure to specify both account numbers on the back of the cheque. Doing this will not only save you time but also the money spent on mailing cheques.

Financial issues

People find themselves in difficult circumstances when they are unable to pay their bills on time due to a lack of available funds. If you find that it is getting harder to pay your bills, it is important to try to prevent the situation from deteriorating. The earlier you try to resolve your financial problems, the easier it will be to resolve them and there will be less of a chance that you may fall into debt or have to face a collection agency.

Avoid the credit card

Credit cards are only really useful to pay your bills when there is no alternative, as you will be incurring interest. However, you may decide that you would prefer to pay the bill over a longer period of time and therefore it is worth incurring the extra interest. You may also find that your credit card charges less interest than your utility provider for overdue bills.

Make at least a token payment

It is important to pay as much as you can towards your 'problem bill', even if you are unable to cover the whole amount. Making regular payments will help to show that you are determined to clear the balance despite struggling financially, which may encourage your creditor to be more sympathetic to your situation. Paying what you can will ultimately reduce the total amount you owe and the interest on your outstanding balance.

Budget. Allocate. Distribute.

Determine which expenses are necessities, like food, water and utilities, and which are luxuries. Many people find themselves trapped in debt due to unnecessary spending. Create a list of all the bills you should be paying off each month, for example your utility bills, and include any outstanding debts. At this point, it is crucial to be honest with yourself because it will give you a realistic picture of your financial capability. At this point, you will be able to work out exactly where your money is going and how much of your debt you can afford to pay back. Additionally, look for things that can be cut down or reduced, such as cinema visits, takeaway food and subscriptions. Cutting back on these types of entertainment can make a vast difference in balancing your finances.

Check your income coverage

After talking to your creditors and removing additional expenses from your outgoings, calculate whether your earnings are sufficient to cover the rest of your bills. If you find that your earnings are insufficient, then this may be the time to seek professional help to explore some of the more formal legal options available for addressing debt.

Seek help

Here are some of your options to tackle any financial issues you might have:

  • Negotiate a payment holiday or period of reduced repayments to give you some breathing space.
  • Consider restructuring the terms of the credit for example extending the term to reduce the monthly repayments.
  • Be honest and upfront with yourself and your creditors. Being upfront and honest with a lender as early as possible may increase the chance that they will be more understanding of your difficulties and they may offer to extend the amount of time you have to repay.
  • Consider a professional advisor to tell you about the many formal legal arrangements to addressing debt and debt related issues, such as an IVA or Bankuptcy.


We hope you have found this guide useful and that you have learned some tips on how to be more organised when paying your bills. As stated, the consequences of failing to make regular payments can be troublesome, so it is best to remember not to set them aside and ignore them. Hopefully you will consider some of our suggestions to prevent yourself falling behind or if you do, the appropriate actions to take to help relieve you from problem debt. To see our commitment to customers with debt issues check out our responsible lending page.