Plus, you might overlook mistakes that occasionally occur with auto-pay, such as double payments, missed payments (companies may charge you for that even if it wasn't your fault) and fees you’ve never seen before, which could signal fraud. You may feel less active in your money life. If you're the type who prefers to keep tabs on every single line item in your budget, auto-pay may veer too heavily into “out of sight, out of mind” territory, Kingsbury says. And with a better score, lenders and credit card companies are more likely to offer you better terms, such as lower interest rates. So auto-paying bills can help ensure you don't miss payments that can potentially ding your score. You're helping keep your credit score healthy. Your payment history (i.e., whether you pay your bills on time) makes up 35 percent of your FICO credit score - the largest contributing factor. If the money isn’t in your checking account because it’s already been allotted to your necessary bills, you can’t blow it on an impulse splurge. Several phone companies also offer bonuses for signing up for auto-pay, from extra data to bill credits.Īuto-pay can also be a way to keep spending in check, especially when withdrawals are timed closely to paydays. Some lenders, like student loan providers, offer a small interest rate discount to people using auto-pay for their recurring bills. You could save money. Electronic payments can save you money in the obvious ways - there's no need to buy stamps, and it’s much easier to avoid late payments and subsequent penalty fees - but there are also hidden benefits. Plus, “If you travel a lot, it’s a great way to make sure your bills get paid if you’re not home to receive them,” says Kathleen Burns Kingsbury, a financial therapist near Burlington, Vermont. That’s good news for your filing cabinets and the environment, too. You're eliminating paperwork. Auto-pay produces less paperwork and fewer bills in the mail since most of the “paper trail” is electronic. Essentially, you're putting them higher on your priority list, rather than putting “whatever’s left” at the end of the month toward them. By automating transactions like paying down a credit card or adding money to a savings account each month, you're creating a permanent line item in the budget for these goals. But perhaps even more important, auto-pay helps make it easier for you to reach goals you've set for yourself - including paying yourself first. You're making it easier to stick to your goals. The most obvious pro for auto-pay is, of course, convenience in paying your bills. Not sure if auto-pay makes sense for you? Consider these pros and cons. (Side note: While you could also set up auto-pay to charge your credit card instead, we don't recommend that unless you're confident you can pay off your balances each month.) which could be disastrous if you're not paying attention to all those debits. When it comes to your money, being able to “set it and forget it” can make paying bills that much easier.īefore you put every one of your accounts on auto-pay, understand that while it can make life super-convenient, it can just as easily do damage if you're not careful with how you use it.Īfter all, setting up automated payments means you're allowing your money to leave your checking account on a recurring basis each month in order to pay your credit card company, mortgage lender, cell phone provider, subscription service provider, etc. ![]() Educational Resources About Family & Work.Educational Resources About Everyday Money.Educational Resources About Financial Planning.Disability Insurance Calculator Money Parachute icon.Disability Insurance For Doctors and Dentists.
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