…Being a person in the world usually comes with a lot of bills: gas and electric, insurance, student loans, rent or mortgage, car payments, credit cards etc. While you can use a calendar to keep track, you may also want to consider auto-pay. Auto-paying simply means that the amount due for any recurring payment is withdrawn from the account when the bill comes due, without your having to authorize it.
So what are the pros and cons to auto-paying? Read on to find out.
The Pros of Auto-Pay Bills
- Improve Your Credit Score. If you’re often late or forgetful about paying bills, you may have noticed your credit score take a hit. One of the best ways to build it up is to be consistent and regular with your payments. A great way to do that is through autopay.
- Save Time. Instead of navigating to dozens of different websites, or mailing checks every month, set up auto-payments once. You should also schedule a yearly review to ensure you’re only paying for services you’re using. That will still take less time than paying each bill individually.
- Secure Your Money. Using online systems is generally more secure than dropping a check in the mail. Data breaches aside, banks take intense precautions with their clients data.
…and the cons of Automatic Payments
- Overdraft Fees. If you’re living paycheck-to-paycheck, or the amount in your account fluctuates a great deal, having bills on autopay may put you at risk for an overdraft. Overdraft fees also add up pretty quickly, so be sure you always have enough in your account to cover the balance.
- Processing times may vary. You should be careful to avoid late fees. You can do this by ensuring you know how long it takes your bank and your biller to process your payment, and setting your payments for well before the due dates.
- Errors can be expensive. There is a (slim!) chance that your bank will pull your mortgage payment twice, or that your electric company will make a mistake and charge you $350 instead of $35. These mistakes are reversible, but often mean stress and phone calls.
Basically: while auto-pay can be a great tool for peace of mind, it also shouldn’t be something you set-and-forget. Actively monitoring your payments and being aware of what’s going out, and when, can save you a lot of trouble! Set yourself Jazmine.com reminders to check on payments and late fees.