The Pros and Cons of Autopay

One of the most common pieces of financial advice is to find opportunities to automate expenses. It’s recommended to set up automatic bill pay, or autopay, for recurring debts, like credit card statements and student loans.

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While autopay can save you time and money, it can also cause problems if you’re not careful. Here are some of the advantages, and the sneaky disadvantages to watch out for, when setting up autopay.

Autopay means your bills are scheduled to be paid automatically, and on time, every month.

Kristin Uptain, marketing manager at Redde Payments, said there are plenty of benefits that come with on-time payments including no more late fees, forgetting to pay bills or writing physical checks. Timely payments are a stress reliever and that’s a great convenience in the life of the everyday consumer.

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“If you don’t keep track of when your bills are paid, or if your payment amount exceeds the balance in your checking account when it’s due, you could end up with overdraft or insufficient fund fees on your statement,” Uptain said.

What consumers don’t want is for overdraft fees to become a regular occurrence. Remember that these small fees add up. Don’t ignore them. Regularly check your bank account and budget carefully to ensure you have a reliable amount of money to make these payments.

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In addition to ensuring your bills are paid on time each month, automatic bill payments can help you better build your credit history.

“Timely payments are one of the most important factors in calculating your credit score; they account for 35% of your FICO score,” Uptain said.

Uptain recommends viewing it as like getting a gold star for every payment. You’ll always need to make timely payments on your bills, so why not benefit from the payment? Autopay can help you improve your standing with your bank and credit.

Autopay systems are largely reliable, but it is possible for this kind of technology to experience the occasional glitch. For example, you might be double charged for a product or service that was provided to you in error.

Uptain recommends regularly checking in to make sure you’re not accidentally experiencing any incorrect transactions like a higher than normal monthly billing statement. Mistakes like these are usually easy to resolve, as long as you catch them early on.