Hazards of Automatic Bill Pay
Photo by SeraphimC.Society is moving toward going green, so doing your part is becoming more important than ever. People now have more ways than ever to help the environment, such as paying bills online to save paper. Many banks have given their customers the option of using prearranged automatic payments from bank accounts, debit cards and credit cards to handle anything from a car payment to Netflix subscriptions. Automatic bill pay takes the thought out of paying bills altogether, but it can also become a problem if you don’t keep careful tabs on your expenses.
Be smart about automatic payments. It’s smarter to use a credit card rather than debt or a bank account since you will be able to notice mistakes in your monthly statements and fix them before any money is taken from your account. Also, if you have a habit of keeping a low balance, overdraft fees will add up if you forget to keep track of your balance.
The MSN Money article, Perils of Automatic Bill Pay, says:
The best candidates for automatic-payment arrangements are those bills that are the same amount every month. They’re not as likely to be the source of contention or error.
But there can still be errors. Watch out for charging the wrong amount and double billing, the two most common errors. Skip auto pay for bills that change from month to month, like phone and utility bills.
The worst mistake you can make when you have automatic bill pay: Not paying attention. Always be sure to check the account every so often to make sure you’re not being overcharged. When you set up automatic payment arrangements it can be easy to lose tabs on the bill. So receiving the paper statements in the mail for larger payments, like your car and rent, can give you a reminder.
Some businesses are starting to charge for the advantages that auto bill pay brings. Don’t do it. Instead of $700 for rent, an extra $60 could be added on each month. The convenience is still there but the risk of running up debt is amplified. Avoid auto bill pay programs that cost extra.
Before you set up any automatic payments remember to be careful and think twice about the type of bill and company you’re paying and payment method before you make any arrangements.
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