Automatic Bill Payment Tips


Consumers love the convenience of signing up to have their bills automatically deducted from their checking or savings account, but it is important to realize that there are several tips that should always be followed. While it is true that some companies offer substantial savings or monthly fee reductions for customers that will allow them to deduct their payment, the simple fact of the matter is that this may not be a good idea for every consumer. The consequences of auto drafts not timed properly can prove to be frightening, but the following guide will help an individual decide if they should take advantage of the convenience or not.

Depending on a person’s pay schedule, it is quite possible to end up having bills deducted from an account on a week in which there is no paycheck. A person that gets paid on the first and the fifteenth of every month will be able to easily schedule out their bills and deposits, but a person that gets paid every two weeks will get paid at various parts of the month. An individual should always make sure that they are not relying on a deposit to provide enough funds to allow an auto draft to go through properly. It is very easy to get caught up in the convenience and forget that multiple dollar amounts coming out at once can cause a balance to decrease rapidly.

An individual that is going to enroll in automatic bill payments needs to keep a close look on their check register, and it is not always a good idea to rely on the information displayed by online banking. Keeping a schedule of all of the bills that will be drafted is the best way to ensure that none of them are forgotten. If a person that mails in a check every month forgets a bill, the result is normally a late fee and slight inconvenience. Any automatic bills that are not properly recorded could end up in bounced checks or a negative balance in the account. The fees associated with either of these occurrences is certainly going to be much higher.

If at all possible, automatic bill payments should be set up against a debit card that is then connected to a checking account. If any fraudulent activities or billing mistakes occur, the transaction will then have more protection under either Visa or MasterCard. Another side benefit is that requesting a new debit card can immediately stop all of the drafts from going through, but it would otherwise be necessary to close the entire checking account if a problem ever arose. Using a debit card is not only safer, but it also makes it much easier to stop in the future if desired.

In most cases, automatic bill payments should only be set up for monthly obligations that rarely alter in amount from month to month. Installment loans are easy to budget for and the consumer will know exactly what is owed every payment. Utility bills, however, can fluctuate with the seasons and cause unexpected drafts to occur. It is incredibly hard to get a refund from a utility company after an automatic payment has already gone through, so it may be better to stick to the traditional methods for any bills that are going to vary in the amount from payment to payment.

The simple fact of the matter is that automatic bill payments are incredibly convenient, but they also get a lot of people in trouble. Companies appreciate consumers that will agree to enroll because there is a much more likely chance of the bill being paid on time. However, an individual should only enroll in such a program if they are sure that they will never have any issues paying the payment on the specific day that the company desires. As long as this isn’t a problem, it may be possible to never write a check again.

This post was written by

jason – who has written posts on Budget Clowns.
Father of three and married to a lovely women. Always looking for ways to save money, and invest it properly for my children's future.

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