Money Smarts Blog
You should automate your bills... or maybe don't.
Aug 9, 2018 || Elizabeth VanCamp
I’m an anomaly when it comes to paying bills. I don’t love how long it takes each month, but I find satisfaction in checking off each bill as I pay it.
However, I’ve been considering the idea of automating my bill payments. If I set up auto pay, my bills would automatically be paid each month without me giving it too much thought. This is intriguing because I’d love to spend less time paying bills each month, and I’m sure I can find a sense of accomplishment from a less tedious part of my life.
I decided to research the pros and cons of paying my bills this way, and what I found makes me much less intimidated by the idea of automation. If you’re wondering if automating your bills will help you or hurt you, here’s what I learned:
Why automating my bills sounds amazing
There are two ways you can go about automating your bill payments. I love this because I don’t like to be told I only have one option. Give me choices!
Bill pay through your credit union or bank
This allows you to input biller information into your financial institution’s online bill pay feature and pay bills directly from your bank or credit union account. It takes a little bit of time to set up, as you need to enter the account number, whether you’d like the payment to be sent electronically or by paper check, and the payment frequency, but the convenience of paying all your monthly bills from one account is worth it.
If you don’t want to lose all control of when bills are paid, this choice is probably the right one for you, as you get to schedule your own payments.
Auto bill pay through a company
This allows companies to pull the funds for your bills from your account. If you’re on top of your finances and know there will be money in your account when a bill is due, automation might be right for you.
You’ll need to feel comfortable giving your account information to your billing companies, but you’ll have peace of mind knowing your bills will be paid on time each month. Which leads me to my next point…
You can forget about your bills (sort of)
Set it and forget it, right? Well, kind of.
Once you automate your bills, they will be paid on the scheduled date, but you should still check on what’s being pulled from your account throughout the month. Do not set it and forget it. I repeat, please do not treat auto bill pay like the Showtime Rotisserie. We’ll cover why in a minute.
You can improve your credit score
If you’re trying to improve your credit score, you could benefit from automating your bill payments. Even if you have a slightly sketchy credit history, a big factor used by credit bureaus to determine your credit score is consistent and on time loan payments. By automating your monthly bills, you can guarantee your payments are received on time, and before you know it, you’ll see an improvement in your credit score.
You can help the environment
If you’re a fellow tree hugger and want to do something small for Mother Earth, consider automating your payments. You can save a whole lot of trees by eliminating paper bills and checks.
You can automatically stick to your goals each month
If you have a goal to pay off your credit card debt, choose the amount and frequency of payments in your credit card’s auto pay feature. It’s amazing how quickly you can reduce your balance when regular payments are being applied to the total.
The same goes for your savings account. Use bill pay to schedule a deposit into your savings account each paycheck. Doing this will help you reach your savings goals in no time.
Why Auto Pay Might Worry Some People
To be honest, I think automating your bills makes a lot of sense and could make all our lives a bit easier, but there are a couple of things to be wary of.
You need to have adequate funds
If you’ve set up auto pay through a company, that money is going to be pulled whether or not you have adequate funds in your bank account. However, many companies give you the option of setting up reminder alerts before your bill is due . This can help you stay ahead of bills and avoid overdraft fees.
You need to watch for mistakes
You need to review your transactions at least once a month to check for errors, like double payments. Automation is not infallible and mistakes can be made by the company pulling the money from your account. While rare, mistakes with auto pay can happen and it’s up to you to catch them.
Final Thoughts on Auto Pay
After researching the pros and cons of automating bill payments, I think it’s clear that it will save you a lot of time and frustration each month. An additional perk is that it will help you pay your bills on time and, subsequently, help improve your credit score.
The worst thing about automatic bill pay is that you still have to be a tiny bit diligent with your finances, but I think most of us can muster that small effort in order to reap it’s benefits.
Ultimately, automation can help you reach some of your financial goals and make your life a little less hectic. Sounds pretty awesome to me.