One of the great benefits of online banking is automatic bill paying. Your bills are paid automatically on a preset date each month. A checking account or credit card can be used as a payment source. If you struggle to pay your bills on time or can’t find the time to deal with your finances, automatic bill paying is one possible solution.
It’s comforting to know your bills will be handled each month with a minimal amount of effort on your part.
Automatic bill paying has several advantages:
- Your credit score might improve. Many people find that their credit scores improve after a few months of paying bills automatically. Late payments should be a thing of the past, provided you adequately fund your checking account. Late payments are a primary cause of lowered credit scores.
- You’ll save money. Paying your bills on time means a few late charges. It also reduces money spent on checks, envelopes, and stamps. How many times have you been unable to find a stamp at home?
- Automatic bill paying saves time. You won’t need to sit down and make time for bill-paying activities. Though it’s not an excuse to put your bills out of your mind completely, you’ll spend less time and energy worrying about paying them.
- It benefits the environment: no more paper bills, checks, or envelopes. You’ll have less impact on the environment and save a few trees. The mail carrier won’t burn gas to deliver your payments, either.
- Identity theft continues to be a significant issue nationwide. While taking care of business online isn’t foolproof, far more effort is needed to keep your financial information safe. Sending snail mail with your account and credit card numbers available to credit thieves is always a risk. There’s a lower risk of identity theft.
There are many advantages to paying your bills automatically. Unfortunately, there are a few disadvantages, too. Consider both before making a final decision.
Consider the disadvantages of automatic bill paying:
- It can be challenging to stop payments. Automatic payments set up with your bank are usually easy to control. However, automatic payments set up with a credit card or with the merchant can take a lot of work to stop. Be sure to investigate the process for ceasing payments. In many cases, written notification is required.
- Excessive credit card debt. If you’re using a credit card as your auto payment vehicle, you can quickly rack up a lot of debt. Keep your eye on your balance and pay it in full each month.
- The costs can be higher. Most automatic bill paying services are free or very inexpensive. However, some do charge high fees. Some merchants also charge high fees if you want to pay your bills automatically. Be sure the costs are reasonable.
- A need for more awareness. Do you know how much your bills are each month? Can you ensure you have enough money to cover the bill? When your bills are paid automatically, you may lose awareness. Review your bills and your bank account balance regularly.
There are a few disadvantages to auto bill paying, but the benefits outweigh the risks for most. Time and money savings are significant advantages over paying your bills manually.
Maintaining awareness of your bills and the balance of your payment vehicle is crucial. Spend a couple of minutes each week monitoring the situation.
Automatic bill paying can save time and money and improve your credit score. Consider adding this helpful tool to your financial tool belt.