by Andrea Carson | May 24, 2023 | Finances
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.
by Andrea Carson | Feb 22, 2023 | Finances, Getting Out of Debt
The nation’s student loan debt is over $1 trillion and is more significant than its collective credit card debt, but there are also 5 million ex-students who are delinquent with their payments.
Student loans are unique because they’re among the few debts not discharged with bankruptcy. The only reliable way to get out of your student loans is to pay them off. Only a federal judge can let you out of your obligation to pay, and they don’t do that often.
A slip can haunt you for a long time.
People frequently get into trouble with their student loans, making getting a mortgage or a car loan much more difficult. While credit repair agencies can do a lot to help remove bad credit history attached to debts that are paid off, current debts are another story.
This process makes it easier to handle your student loans effectively:
- Assess your situation. Student loans can be confusing. You’ll likely have more than one loan, which different financial organizations made. The company servicing the loan might be completely different from the one that provided the loan.
- A great central source of information is the National Student Loan Data System. This resource may provide all the important dates and other information about your loans, including the services.
- Your credit report can be a good way of tracking down the information regarding your private loans. Your college should also have the information you require. However, personal student loans are not covered in that data system.
- Ensure your information is current. For example, the address listed belongs to your parents. When you have your address, you should change your data accordingly.
- Update all the applicable information, including your email address and phone number. You want to know when there is an issue with your account.
- Create a strategy for repayment. Your options depend on whether your loans are federal or private.
- Federal loans have very flexible repayment options. You can extend your payments out as far as 25 years. You can establish a plan with lower payments now and higher payments later on. Payments can even be a function of your income.
- There can be other options for private loans, but they will vary depending on who made the loan. Be sure to call them and see what other options are available.
- Consider automatic payments. Federal loan interest rates are reduced by 0.25% if your payments are taken automatically out of your bank account. Similar deals are usually available with private loans. Either way, you’ll always be on time if the charges are automatically removed from your account.
- Be focused. Debt is like a slow leak that keeps draining money away from you. It would be wiser to put any extra funds towards higher interest-rate debt. But if your student loans are your only real debt, put some extra money toward the principal when possible.
- Consider a second job to get rid of those loans quicker. Student loan interest rates are relatively low, but the payback period is extended. The interest adds up over ten years or more. Pull out a calculator and look at the cost.
- Create a goal of making all of your payments on time. Create a second goal of paying your loan back early.
While making loan payments is never fun, it’s a fact of life for most adults at one time or another. Dealing with student debt is a big responsibility. It could be a newly graduated student’s first big responsibility. Get on top of the situation now, and the future will be much brighter.
