With so many aspects of our lives becoming digital, auto-payments help us get rid of having to remember to pay bills. But not everything about them is beneficial.
Using automatic payments simply makes sense in today’s overly digital world. However, they are beneficial only if we avoid a few negative scenarios.
1. What Is Auto-pay and How Does It Work
Automatic payments are nothing else than telling your bank to transfer money on a set date and for a set amount to pay a bill. They are made with your checking account or credit card. They are incredibly easy to set up and help us save time and just take one worry of our endless to-do lists. All you have to do is either give your account information to the vendor or provider you are trying to pay or log in to your e-banking account, choose the bill pay section and enter the information directly from your bill.
2. Advantages and Disadvantages Of Auto-pay
Auto-payments generally come with benefits. There’s not only math behind why it makes sense, but there is also an important psychological factor as well. You set it up and you can forget about it, knowing your People’s Gas utility, internet, and other bills will be paid on time. You also begin not to miss the money as there’s no painful goodbye that is involved every time you have to take money out of your hard-earned income to settle a bill. In a way, you also save money as you avoid any late fees and keep your credit score safe from harm. There is also the environmental aspect as auto-payments usually come with paperless bills and receiving your bill by mail reduces your carbon footprint.
There are a few circumstances where you might want to cancel your autopayment such as when you are not paid regularly and some other instances where they aren’t so beneficial.
It’s not for control freaks
Some people just don’t like automatic payments because they feel like they are losing control and being a control freak isn’t such a bad thing. Some people like to make multiple payments during the month and for different dollar amounts as they have a financial strategy they want to stick to such as repaying debt more quickly.
It could result in account overdraft
For auto-payments to be beneficial, you need to ensure you have sufficient funds in your account. When you are without a job or income, using auto-pay may result in an account overdraft, bringing you overdraft fees from your bank, and probably from the bill collector as well.
You could overlook billing errors and get overcharged
“The ‘out of sight, out of mind’ nature of auto-pay is convenient, but it does not work in your favor in case of billing errors and hidden interest charges. So, you should keep an eye on your bank statement from time to time.
Safety
Using auto-pay means giving your information out and even when it’s cancelled, you can’t take the information back. Although companies are taking cyber security very seriously these days and investing to strengthen the information of their customers, one can never be too careful.
You could get tangled in a maze
Sometimes, cancelling auto billing through the provider of the service can be very frustrating. Some companies ask for a certified letter and make you waste precious time looking for information on how to unsubscribe from their service, hoping an unhelpful AI assistant will make you change your mind.
Takeaway
Some people just don’t like automatic payments because it’s a feeling of loss of control. While your payments are being managed for you, some people like to make multiple payments during the month and for different dollar amounts. With so many aspects of our lives becoming digital and on the go, it only makes sense to ease the burden of remembering when to pay a bill and doing it manually. Setting up automatic payments will make your life a lot easier and take unnecessary decisions off your plate.
