With the numerous invoices and bills that arrive in your inbox or mail box every month, it can get quite time-consuming to pay these bills – whether it’s from bank accounts, debit cards or credit cards. Automatic bill payments can be a tempting time-saver that is convenient and ensures bills are paid on time. But despite these advantages, there are some pitfalls you need to be aware of.
We’ve put together some pros and cons of using auto-pay for your monthly bills.
PRO – bills will be paid on time
When you set up an automatic bill pay with your bank, you don’t have to worry about forgetting a due date on a bill. As a result you’ll avoid late fees, potential disruptions in service or hits on your credit report.
CON – slip ups can happen
No automatic bill payment system is perfect and billing mistakes can occur from time to time. Monitor your account on a regular basis to check for slip ups, wrong charges or double-billing. When using a credit card, make sure to check it each month to verify that the charges are correct. If you’ve linked the bill with your checking account you’ll also want to make sure that you don’t run out of funds. Otherwise, overdraft fees may apply.
PRO – reduce stress and save time
By setting your bill-paying process on autopilot you avoid having to sort through paper bills every month and writing checks or setting up payments manually through your bank’s online bill payer. In addition, by using an automated bill payer, you can go paperless, which not only reduces your impact on the environment but also minimizes clutter.
CON – lose track of your payments
While automating your bill payments makes your life less stressful, it has the added side-effect of reducing visibility of these bills. By not physically paying the bill every month, you may end up spending more than you realize. It’s important to track automatic payments in your budget just as you would any other expenses.
PRO – get rewards
Some banks offer fee-free checking accounts when you automatically pay a certain number of bills from their accounts every month. In addition, some credit card companies offer more rewards when bills are paid on an automatic bill scheduler.
CON – lose some level of control
By setting up auto-bill payments for monthly bills you lose a certain level of control – especially for variable expenses. Retain control over these expenses in case you go over your usage limit; if your bill is outrageous, you don’t want your bank account to pay it without your knowledge. You should never auto pay your credit card, since it’s up to you to verify that all of the charges on your credit card are accurate.
The bottom line is this – auto bill-pay can be a valuable tool, but it is not an excuse to “set it and forget it.” Monitor the financial activity on your account and only use it wisely.