Setting up automatic bill payment can be very helpful in managing your money and the many bills you have to pay. However, there are some disadvantages that come with it. To find out if setting up automatic bill pay is the right move for you, keep reading to learn about all the pros and cons!
Automatic bill pay can be used for many things such as utility, entertainment, household, and other bills. When you set it up, your card is charged automatically for every monthly bill. Although there are advantages to this, there are drawbacks too. You should thoroughly consider the pros and cons and how they could affect your lifestyle before signing up.
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Pros of Automatic Bill Payment
- Convenience: If you are someone who has many bills to pay and often loses track of all of them, setting up automatic bill pay can really help with managing them. Once you set it up, you won’t have to worry about remembering to pay them each month.
- Save Your Credit Score: Setting up automatic bill payment means that you will rarely miss a payment because it will be automatic. Because of this, your credit score won’t be harmed and it will also keep your credit score high.
- Saves Money: When automatic bill payment is set up, some companies offer discounts on interest rates charged or the amount owed. Additionally, it’ll help you prevent late payment fees. Furthermore, you won’t have to pay for checks, stamps, envelopes, or gas for trips to the post office.
Cons of Automatic Bill Payment
- Forgettable: Because the payments are automatic and you rarely have to do anything with it, it can be easy to forget what bills you’re paying and when. This might lead to bank errors that you might not notice or continuously spending money on subscriptions you no longer use.
- Overdraft Fees: If you don’t have enough money to cover your payments, you could get a large overdraft fee. Because of this, I recommend you set up automatic bill payments for fixed expenses, such as car payments, rather than variable expenses, such as utility bills.
- Stopping Payments: Although setting up automatic bill payment is very quick and easy, stopping them is another story. It may require you to notify your financial institution in writing, by phone, or in person.
How to Use Automatic Bill Pay Wisely
Sign up in the right place
As mentioned previously, it would be smart to set up automatic bill payment for expenses that are fixed. This way you know just how much it will cost, which will prevent overdraft fees. On the other hand, variable payments are different each month, so you won’t know for sure what the cost of them will be.
Set up electronic alerts
Electronic alerts are helpful to let you know when your balance is running low or when a bill is due. If you’re bank or credit union offers electronic alerts, I highly recommend you take advantage of them to stay on top of things. Although automatic bill payment is meant to make your life simpler, it can have the opposite effect if you aren’t careful.
Author’s Verdict
Now that you know all the pros and cons of automatic bill payment, you can assess if setting it up is the right thing for you. If you do plan on setting it up, be sure to stay on top of things and use the tips we mentioned in this post!
In addition, we have a list of bank promotions to get some extra cash in your pockets today. You may also want to check out savings accounts if you want to get started on saving up money.
