What Is a Returned Payment Fee?

A returned payment fee is a charge that occurs when a payment bounces due to insufficient funds or other reasons. These fees can be costly on their own, but they can also be accompanied by other charges. Understanding how returned payment fees work and how to avoid them is crucial for maintaining your financial health.

How Does a Returned Payment Fee Affect Your Credit?

Returned payment fees by themselves won’t impact your credit score. However, if you have a payment returned and you don’t make up the payment within 30 days of your due date, the lender may report the missed payment to the credit bureaus. Even a single missed payment can have a significant negative impact on your credit scores, so it’s important to get caught up as quickly as possible if a payment is past due.

How to Avoid a Returned Payment Fee

There are several strategies you can employ to avoid returned payment fees:

• Maintain a buffer in your checking account: Keeping a small buffer in your checking account can help you avoid returned payments and overdrafts.
• Align your due dates: Adjust your payment due dates to align with when you receive your paychecks to ensure you always have enough funds to cover your obligations.
• Keep track of all recurring payments: Set up payment reminders for all your obligations, regardless of how often they come due.
• Set up overdraft protection: Link a savings account, line of credit, or even a credit card to your checking account to cover any negative balances automatically.
• Ensure accurate bank account information: Double-check any bank account information you enter for payments to ensure accuracy.

The Bottom Line

Having a payment returned can be costly, especially if it triggers multiple fees and interest charges. While mistakes can happen, even with the best intentions, it’s important to keep track of your income and expenses, particularly recurring payments, to ensure that you always have enough money to cover your obligations. If you do have a payment returned, rectify the situation as quickly as possible, and also reach out to your financial institutions to see if you can get a break on the fee. While it’s not a sure thing, it can be worth trying if you’re a long-time faithful customer.

Contact O1ne Mortgage for Your Mortgage Service Needs

At O1ne Mortgage, we understand the importance of managing your finances effectively. If you have any mortgage service needs, don’t hesitate to call us at 213-732-3074. Our team of experts is here to help you navigate the complexities of mortgage payments and ensure you have the support you need to avoid costly fees.