How to Make Bill Payments Automatic Work for You

There are two categories of people when it comes to paying bills.

Some people would prefer not to do it at all. They aren’t fond of all those figures—oh, no! As a result, people put off paying bills or delegating responsibility to their spouses since it simply does not interest them. Those people are known as Free Spirits.

There are also Nerds. Nerds enjoy the sense of order and control that comes with paying bills on time (or early), and they almost certainly have a spreadsheet that tracks all of their payments over the last five years.

There is no right or wrong personality—everyone is either a Nerd or a Free Spirit. It’s just the way you’re wired to manage money.

And the best part is that automatic bill payment benefits both nerds and free spirits.

The Advantages of Automation

When you owe corporation money for a service, you agree to allow them to withdraw that money from your bank account at regular, predetermined intervals.

“Hey, I need this much money from this account,” the corporation tells your bank when the planned time arrives. You don’t have to do the grunt work of moving money around since the bank gives it to them.

Less Stress, Less Effort

Automatic bill payment is extremely convenient because it relieves you of the burden of remembering to pay your bills. Consider your expenses: rent, utilities, cell phones, subscriptions, credit cards, and perhaps other debts. That’s a lot of deadlines to keep track of!

To Free Spirits, keeping track of those dates sounded like a nightmare. And the only reason you remember them is that you scribbled them down on sticky notes.

You don’t have to remember with automatic bill payment. The Nerds can now depart from Sticky Note City.

Better Scheduling

Have you ever had a bill—or several bills—come due at the most inconvenient time? Have you ever felt sick with worry about how you’ll pay them all while still having enough money for groceries or maybe a nice meal out?

You’re not alone if this sounds familiar. Seventy-eight percent of Americans are on a fixed income. They’ll always have too many months left at the end of their pay period.

On the other hand, automatic payments can help you keep track of your money throughout the month, so you always have enough money to pay your bills, regardless of when you get paid.

That’s because they allow you to choose your due dates. So you can pay your expenses when you have the most money, on or near payday.

That isn’t to say you can skip a month to change the date. Contact the company and negotiate with them if you need a later deadline.

If you’re paid monthly, and your expenses are due immediately before payday, requesting a delayed due date may be beneficial. For example, if most bills are due on the 10th but you are paid on the 15th, you may wish to ask the company if you can postpone the due dates.

You can also specify an earlier deadline. It may seem paradoxical, but it works—especially if you get paid every week or two weeks.

Assume you are paid bi-monthly and that your rent, phone, and car payments are due on the first of each month. So you’d pay your rent on October 1st, but your phone and car payments would be due on September 15th.

Spreading your payments out this way helps you balance your bills and day-to-day living expenditures, so you’re less likely to run out of money at a specific point of the month.

Payment Security

One of the main concerns people, particularly nerds, have about automatic bill payment is online security. They are unsure if their financial information is truly secure.

However, paying the old-fashioned way isn’t foolproof. If a mailed check is taken, the thief has complete access to your bank account, name, and address. That’s a lot of private information!

Furthermore, online security has vastly increased. The Federal Trade Commission (FTC) and other organizations assist businesses in protecting their personal information. Secure logins, payment processors, and other security measures make it easier for businesses to protect you when you pay your bills online.

The Negative Effects of Automation

There are certain disadvantages to automatic online bill payment. Your Free Spirits should learn from the Nerds: just because something is safe most of the time doesn’t mean you can sit back and ignore your bank account forever.

The Nerds, on the other hand, can learn a thing or two from the Free Spirits. It’s your job to unwind. You may use automated bill pay safely and save the hassle of paying bills manually by following a few basic steps.

Three frequent issues and their solutions are listed below.

No time limit.

Companies using automated payments have indefinite access to your bank account, so the money will continue to flow out until you stop them off.

If you’re canceling a subscription—whether you’re relocating or simply no longer using it—make sure your automatic payments are canceled. Paying utility costs for the individual who moves into your former flat is the last thing on your mind.

Mistakes in Withdrawal

When processing your automatic payment, either the company you owe money to, or the bank can make a mistake. It’s uncommon, but it does happen.

And it can be difficult to fix those errors. Because no one wants to take responsibility or pay to repair the situation, some companies and most banks will blame each other.

If you spot it early, it’s far easier to correct a mistake, so check your bank account at least once or twice a week to ensure everything is in order. (This is for you, Free Spirits!)

If you discover an issue, notify the bank and company right away. The sooner you report a disputed charge, the more likely you will receive a refund.

Also, maintain track of all your communications with them so you can put an end to any foolishness and fix the issue.

Fees

Automatic payments reduce the risk of late penalties, but if you’re not attentive, they can also increase the risk of other expenses.

Some businesses and institutions charge payment processing fees. That’s ridiculous! It would help if you never had to pay additional money to pay a bill; therefore, locate a free method and use it.

If you don’t have enough money in your account, you’ll be charged fees. The corporation will then charge you a penalty fee and the original amount.

Or you might get a fee from your bank (because nothing pleases them more than looting clients with exorbitant banking costs).

If your $175 electricity bill is due and you only have $150 in your account, the bank will fund the remaining $25. They’ll then demand payment and slap you a $35 overdraft fee. So that $175 bill becomes a $210 bill. That’s terrible!

Traditional banks, of course, make money by exploiting customers with exorbitant interest rates and fees—in 2019, they made $11 billion in overdraft fees.

2 (And that’s just the biggest banks in America.) We haven’t even included the smaller local and regional ones.) They’re hoping you’ll make a mistake with your automatic payments and fall into the overdraft trap so they may benefit from your misery.

The good news is that if you pay attention to your account and make sure you have enough money for upcoming payments, you can easily avoid this.

Tips for Automatic Bill Payment

The safeguards we just discussed will go a long way toward making online bill pay a beneficial component of your budget. There are a few more ways to make the most of automated payments and optimize the benefits.

Select the Correct Bills

Most bills benefit from automatic payments, and some companies even provide savings for registering in online autopay. If you regularly support a charity or organization, you can automate donation giving. It’s also secure for paying off most debts, including school loans.

However, if you’re attempting to settle a debt with a collection agency, you should never use automatic bill payment.

You don’t want someone with whom you’re fighting to have access to your bank account, debit card, or credit card information. Shady debt collectors will raid your account and empty it if they do.

In this instance, the best course of action is to continue making manual payments using money orders[ME1] s[JW2] [ME3], so you can protect the rest of your money as you pay off your debt.

Make a financial plan.

Many of you, especially Free Spirits, groaned at the term budget. But here’s a simple fact: Automatic bill payments work best when you set a budget.

Automatic withdrawals will bite you in the buttocks if you’re prancing amid wildflowers in the Land of Uncontrolled Spending. Because if you spend too much, you’ll run out of money and owe the corporation a charge for a failed payment.

The bank resembles a nasty witch that dwells in the woods and devours children. They’ll take you deeper into the Forest of Fees until you’re entirely bankrupt.

They aren’t going to look after you. You can take care of yourself if you set a budget. You’ll have sufficient funds in your account to cover those automatic installments.

You’ll also realize how liberating it is to be in charge of your finances. When you give each dollar a task, you’ll be amazed at what you can accomplish.

EveryDollar makes budgeting more accessible than ever. This app allows you to direct your money so you may get out of debt and feel more confident about your financial future.

Maintain your passion.

It’s easy to “set it and forget it” with online bill pay. You are less linked to your money since you are not experiencing the pain of making the purchase. Even the nerdiest of Nerds can lose motivation to stick to a budget when they are disconnected from their money.

However, if you genuinely want to win with your money (and stay within your budget), you must keep track of your monthly spending, especially if you’re attempting to repay debts.

To make sure you’re on track, check your account frequently. (You can track costs automatically with EveryDollar because you may link the app to your bank account.)

Another option is to automate your minimum debt payments and manually make additional payments. You can still track your spending and feel connected to it this way. For Free Spirits and Nerds, it’s the best of both worlds!

Don’t use your credit card to make automatic payments.

You’re not paying anything when you pay a bill using a credit card. You’re simply shifting the obligation to another location. A terrible location with a 25% interest rate.

As a result, “paying” bills using a credit card adds to your debt—you still owe the original amount plus interest.

Let us be clear: using credit cards to pay bills is not good. They’re a loan product that creates money for banks by draining the life from your wallet.