Automatic Online Bill Pay: Is It a Good Idea or Is It Too Risky?

Libby Kane
Posted

We’re all busy, and we have better things to think about than when our credit card bill is due. A single missed bill payment can seriously lower our credit score, which is why it’s so tempting to try out automatic online bill pay. Before you sign up, however, know that it comes with risks.

Auto bill pay lets you pay the bills each month automatically, without even seeing them.

That’s great, but you should always be on top of your finances; we don’t want you to go on total autopilot.

Remember: If you use auto bill pay, you must always make sure that you have enough money in your account ahead of time so that you don’t overdraw!

If you don’t have a lot of extra cash and have to rush to deposit your paycheck before you can pay your bills, do NOT use auto bill pay. The risk of overdraft isn’t worth it!

Read on for when you should and when you shouldn’t take the plunge.

DO AUTO BILL PAY:

1. Your Savings Account

First, remember to pay yourself, since you’re more important than anything else. Send automatic, regular deposits from your paycheck to your savings account. Making your savings automatic will help you build up your safety net without feeling the pinch.

2. Fixed Expenses

Auto-pay expenses that are the same every month, like gym memberships, Netflix, cable, mortgage, and insurance.

DO NOT AUTO BILL PAY:

1. Variable Expenses

Don’t auto-pay expenses that vary every month, like your cell phone bill. 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.

2. If There Are Convenience Fees

Some providers will charge “convenience fees” for allowing you to set their bills on auto-pay. If that’s the case, don’t do it. There’s no reason to shell out simply to avoid manually paying your bills.

3. If It Means You’re Going to Stop Keeping Track of Your Accounts

Be careful about automatically paying inaccurate charges on any of your accounts; auto bill-pay isn’t an excuse to stop reading your statements. Also be on the lookout for overdrawing from your account, which could happen if the automatic system deducts money you don’t actually have. You could also potentially face late payment fees if a service provider changes your bill’s due date but you neglect to change it in the payment system. None of these should be issues as long as you remain vigilant.

The moral: Auto bill-pay is a valuable tool, but it is not an excuse to tune out from your own accounts. Be mindful of your financial activity and employ it wisely!

  • Rachel

    For variable bills, I have found it useful to have them automatically paid to a credit card (assuming this is an option). Then, I check the bill each month and then pay off the credit card balance in full. If a mistake is found in the bill, a credit can be issued to the card but allows for hassle free payments.

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