Even though most bills come only once a month, our busy lives mean bills are a hassle. And forgetting to pay a bill on time can have negative consequences – like late fees, your credit score going down or even a service being shut off.
There are some good reasons to automate bills, but there are also reasons not to automate your bills. Read on to learn what’s best for you.
What are some benefits to automatic bill payments?
1. Save time
Automating your bill payments saves you from having to manually pay them online or by mailing a check or making a phone call.
2. Save money
When your bill payments are automated, you’ll avoid the expense of a stamp or a pay-by-phone fee. You’ll also avoid late fees. Some billers even offer a discount if you set up autopay, such as $5 off your monthly bill or a small interest rate reduction.
3. Save the environment
If you’re paying your bills automatically, you can save the paper needed to mail in a check in an envelope. To benefit the environment even more, opt in to electronic statements so no paper is mailed to you. You can even do this for your Patelco monthly statements – just change your preferences in online banking.
4. Maintain your credit score
Did you know that your payment history is the single most important component of your credit score? Over time, on-time payments can even help FICO reports with negative marks. Automating your bill payments is a great way to make sure your payments are on time!
5. Stick to your budget
If your bill payments are automated, it will be easier for you to stick to your budget since you don’t have an option of whether to pay these bills or not.
6. Protect your information and your identity
Your information can be compromised if one of your paper bills or your checks is stolen in the mail. Automating your payments helps protect you from this kind of theft. Monthly statements from your credit union could also be stolen from your mail – so opting in to eStatements is also a good idea.
What are some disadvantages to automatic bill payments?
Automating bill payments is not for every person or every bill. Consider these reasons not to automate your bill payments.
1. You don’t want to keep tabs on the amounts
Although automated bill payments are convenient, you should still keep track of how much bills are by reading your email messages from the biller, or by logging in to look at your account. Knowing how much bills are helps you stick to your budget. You also want to make sure you’re paying the correct amount. Some bill pay systems won’t change the amount paid even if the amount of the bill changes – so you could end up paying too much or too little.
The bottom line is that if you don’t want to independently keep tabs on amounts, you may be better off paying the bill manually each month so you’ll know how much you’re paying.
2. You don’t know if you’ll have enough to cover the bill
If you’re not in the habit of checking your account balances or live paycheck-to-paycheck, automated bill payments may not be right for you. Or, if you’re a business owner, contractor, or work at a job that pays irregularly, you may not have a steady income deposited that would always cover your bills.
3. You have a bill that fluctuates each month
Rent, mortgage payments and car payments are usually the same each month, so these bills are excellent candidates for automatic billing. Some people will enjoy the convenience of automating utility bills, but not everyone is going to be comfortable automating this category of bill because it can vary widely from month to month. Consider an electricity bill from a hot September versus the bill from a much cooler October.
Finally, credit card bills may not be the best bills to automate because they are almost guaranteed to vary from month-to-month. Additionally, if you have a fraudulent transaction or end up returning a big ticket item, you’ll be out of the cash you paid when your monthly credit card bill was automatically processed.
Where should you set up your automatic payments?
Each biller is different. Some offer options – set up the payment directly with the biller or set it up from your credit union account. Other billers only offer one way to pay.
Setting up automatic payment directly with the biller is ideal for bills that may change each month, like a utility bill. Some billers support ACH transfers only (where you provide your routing and account numbers), while others allow credit or debit cards as forms of payment.
However, when it’s possible to set up an automated bill through your credit union account, you protect yourself because you’re minimizing the number of companies that have your financial information. And if you need to make changes in the future, your credit union’s online banking can a one-stop shop if you have multiple bills set up there.
How can you save time without automating your bills?
You don’t have to automate all your bills to save time, save money, protect the environment and protect your personal information. Use Bill Pay from Patelco Online™ — where you can pay almost any bill. Check out our Bill Pay guide to learn more.