Could it save you time and money or end up costing you?
Over the course of the last decade, automatic bill pay has slowly but steadily crept into every aspect of money management. Along with being a time saver, automatic bill pay options are efficient and offer more security than sending out paper checks. With that said, automatic bill pay isn’t an option that every consumer should use, nor is it an option that should be utilized for every bill you pay. There are pros and cons to auto-bill pay and you should be aware of both before you decide to jump on the auto-pay bandwagon.
The Pros
Automatic bill pay was developed and adopted by thousands of banks and companies for very good reasons. The concept has plenty of pros, both for the companies that offer such services and the consumers who utilize automatic bill pay daily.
- Convenience: The convenience of auto-pay is what draws most people in. You will never have to worry about mailing out checks, or remembering to visit multiple websites on different days of the month again.
- It may increase your credit score: Auto-pay can help you keep track of your due dates, and ensure everything is paid on time. The number one factor in your credit score is on-time payments. Auto-pay could effortlessly help your credit score increase over time.
- It is more secure: Sending checks in the mail can be dangerous, as you never know when your information will be intercepted. Banking websites are more secure than sending money via the mail, which cuts down your risk of identity theft.
The Cons
While there are plenty of pros to automatic bill pay options, there are still some cons you should consider before allowing your bills to go on auto-pilot.
- Late Fees May Still Occur: While automatic bill pay is designed to make paying bills easier, they still take time to process. You’ll need to figure out the timeline for processing, while keeping in mind that each company is different. If for example, your bill is due on the 15th and you set your payment up for the 15th, it may not hit the creditor for 2-5 days. This could lead to late charges that will only increase your debt. Allowing a buffer of 3-5 days mailing or processing time will help prevent this from occurring.
- Not all bills are set up for auto-pay: When it comes to the amount due, some bills vary from month to month, which can make auto-pay a little more tricky to manage. Whereas your mortgage will typically be the same amount every month, your electric bill will most likely change, making it more difficult to establish the payment ahead of time.
Should I Use Auto-pay?
Auto-pay is a great option to put your bills out of mind and feel confident that they will be paid on time each month. With that being said, not every bill is an ideal choice for auto-pay. You should avoid using auto-pay for bills that are subject to change from month-to-month. For many consumers though, automatic bill payment has made paying bills one less thing to worry about.
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