Posted on: Apr. 05, 2017 in Credit, Debt, Money

One of the great conveniences of our time is automatic bill pay options. Everything from rent and car payments, to student loans, to cell phones and utilities can be set up to automatically be paid every month so that you don’t have to remember to do it. We discussed some of the advantages of automatic bill pay yesterday. Before you dive in, we did want to bring up some of the disadvantages and some words of caution.


If you set up bills to be paid automatically from your checking account, you’ll need to make sure you have enough money in your account prior to the bills getting paid. Setting up a calendar of payments and peeking at your balance daily can help make sure you stay in the black. If automatic payments cause you to become overdrawn in your account, you could incur significant fees such as overdraft fees from your bank and late fees from the party you were trying to pay.

Use caution if your automatic payments come out of the same account from which your debit card draws. As many people use a debit card for every day expenses such as groceries, gas, and other expenses, it’s easy to lose track of exactly how much you have available in your bank account. While autopay does take out much of the guesswork, avid debit card users will really want to track their spending, paychecks, and other charges.

Typically, once you set up automatic payments, they will continue for a specified period of time or until you stop them or pay off the loan. However, if for some reason you need to change your payment method or you’re cancelling the service, you’ll need to make sure to notify the company in enough time to stop the payment. Otherwise, you may end up paying out more than you intended.

Periodically, your bank may update your card with new numbers. If you are using a credit or debit card to make automatic payments, you’ll need to be sure to update all parties with the new number. Failure to do so can cause you to incur late fees when they attempt to process the payment and it fails.

If you’re set up to make automatic payments on a credit card, you’ll want to watch this extra carefully. If you set it up to cover just the minimum to ensure you’re never late, you’ll want to keep an eye on the balance or it could creep up. Also, if your balance does grow, so will your minimum payment. You’ll need to be sure that you’re prepared to pay a higher charge.

Paying bills on time is one of the best ways to maintain a healthy credit score. Used properly, conveniences like automatic bill pay can be a great way to keep you on track!

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