Pros to Automatic Payments
Let's say that you have ten bills that you need to pay at the start of every month. This means that you have to sign in to ten different websites (likely remembering ten different passwords along the way) and input your payment information ten times. With automatic payments, this step is taken care of. You are probably already busy with everything else in your life, so automatic payments can take one thing off of your task list.
2. Never Miss a Payment
It can be difficult to keep up with every bill. Each one may have a slightly different due date, which can make it all too easy to be a few days late on accident. Other times, you may miss payments entirely. With automatic payments, your bills will be paid on scheduled days, so you do not have to worry about keeping track of due dates. This can build up a strong record of paying bills on time, which can help raise your credit score.
3. They Are Secure
Without automatic payments, you may be paying your bills through the mail. While this is not inherently a bad thing, there may be concerns about your payments reaching their intended destinations. Automatic payments are done online, and your bank or credit union contains security measures to keep your information secure. While hacking does occur, it is rare, and locations that you would authorize for these payments have strong track records for cybersecurity.
There can be a lot of bills to keep track of. Instead of manually paying for each bill, learn more about automatic payments.
Things to Consider About Automatic Payments
1. Risk of Overdraft
The same convenience that makes automatic payments such a positive can also make it a negative. If bills are paid every month, you have to make sure that your bank account has enough funds available to cover the payments on their scheduled dates. Without careful attention, you could overdraw your account. This could mean paying fees to your financial institution.
2. Automatic Payments May Not Notice Errors or Changes in Prices
Automatic payments work best when you can accurately predict how much your bills will be in total. This can help you keep track of how much you will spend when bills are due. However, if you use these payments, you will not be as easily able to notice and correct errors in billing. If you have been overcharged but use automatic payments, you may overpay without realizing it. The same is true for changes in pricing. While companies often send notices when their prices change, you may not realize when this occurs.
3. Staying Subscribed Longer Than Intended
Everyone has had a moment where they signed up for a free trial that they forgot to cancel. This means that they have to pay for a full month of the subscription afterward. Automatic payments work similarly. Because they involve a more hands-off approach to paying bills, those with automatic payments may forget to cancel subscriptions they no longer need. This can result in losing more money than intended. Some companies also make it a bit difficult to get out of automatic payments, which can add stress to what should be a stress-reducing payment method.
Make to the Most of Your Automatic Payments
Automatic payments offer a level of convenience in paying bills that was previously impossible, but as the list above shows, there are reasons to avoid using it too. Consider these tips when using these payments.
1. Monthly Check-Ins
When using automatic payments, keep an eye on your bank account to make sure that there are no unexpected costs associated with your bills. You should also look out for updates from the companies you are doing auto payments with to keep track of their price changes.
2. Schedule Payments for a Safe Date
To make sure that there will be enough in your bank account to cover your bills, schedule your automatic payments to occur after payday. This will add extra peace of mind that there will less chance of an overdraft
3. Custom Minimum Balance in Checking
Your financial institution will allow you to set a custom minimum balance to your checking account. This added layer of protection can help dodge overdraft charges from unexpectedly high bills.
4. Consider a Mix of Automatic and Traditional Billing
Automatic billing eliminates a lot of the hassle from the bill-paying process, but it can add stressors of its own. To get the most from automatic payments, have some of your bills set up for automatic payments. For example, someone who knows that their Internet bill is the same each month may have that set to automatic pay. Their water bill varies quite a bit, though, so they pay that manually each month. Doing this can still mean that you are manually paying fewer bills, but it also helps avoid surprise costs.
Modern Banking and Automatic Payments With PrimeWay
Automatic payments are just one of the ways that modern technology gives you more options for your banking. At PrimeWay Federal Credit Union, we aim to make banking as accessible and helpful as possible through services like mobile banking. If you're interested in automatic payments, investing, or an overall change in your banking experience, consider PrimeWay.