Benefits Vs. Drawbacks of Automatic Payments #payingoffdebt #payingbills #creditcards

So you’ve decided to enter into the world of Automatic Payments. What do you do now? First you have to make the choice of which way you want to enter this new, exciting world. One way is through the “Bill Pay” option most of the nation’s banks offer for free. The other is setting up the payments from the utility or Credit Card Company on their websites. Either way has the same set of benefits and drawbacks so the choice of which to pick is inevitably up to you.


While there are many benefits to setting up your bills on automatic payments I am just going to focus on the main ones.

  • NO LATE FEES – This benefit is pretty much self-explanatory. Since the bills will be either deducted from your bank account by the company, or a check will be mailed by your bank, you are guaranteed your payment will not be late.
  • WORRY FREE DUE DATE (This is only a benefit if you go through the company to make the payment, if you use your bank bill pay, you will have to change the due date) – One credit card company changed the due date on my credit card. Normal fluctuations by a day are usual, depending on the card agreement or monthly billing cycle. This credit card company, however, changed the due date by five days. While I completely admit that the error was my fault, I should have paid attention to the bill, I was caught off guard by the change and ended up with not only late payment, but a late fee and jacked up interest rate. Even after several attempts of talking to numerous managers, they still would not lower my interest rate.
  • SAVING TIME – The amount of time spent on writing checks every month varies for all families. No matter the number of bills, each week or bi-monthly time is spent writing checks, filing out payment slips, and addressing and stamping envelopes. Paying bills takes time, no matter how many or little bills you have. Automatic payments free that time allowing you do something you might actually enjoy.
  • SAVING MONEY – Not only will you be saving money by evading late payment fees and high interest rates, but you will also save money on checks and stamps. For my family I used to buy a book of 100 checks at $34.95. I wrote 20 checks a month and the book would last 5 months, costing my family $83.88 a year in checks. Now that I have almost all my bills on automatic payments, I only write 6 checks a month. The book now lasts around a year and four months, saving me around $50.00 a year in check costs. I’m also saving $5.74 a month in postage, which makes a grand total of saving over $100.00 a year.
  • PAYING OFF DEBT FASTER – In the world of everyone’s interest in paying off their debt more quickly. Setting up your credit card payments on automatic payments actually helps you do just that. When I was writing checks, it was really easy for me to skim off the top of a payment and just send in the minimum. Using that extra money for something I really didn’t need. With automatic payments, however, I have specified the dollar amount I want the payment to be. Since that is what they will take, I’m not left with any room to skim off the top.


While sitting down and really thinking about what the drawbacks of automatic payments really are, I could only come up with three. Since I’ve been in accounting for the last thirteen years it is easy for me to be meticulous with my money. My budget and check register are balanced daily and I am aware of every single penny earned and spent.

  • RECORD KEEPING – If you think that automatic payments do not require attention then Auto Pay is not for you. Even though the money is taken out without you having to lift a finger, it doesn’t mean you can slack on keeping track of your money. You still need to be responsible and make sure the money is in the bank account to take.
  • OTHER BILLS – Another problem I have come across is that I’m not used to “having to pay the bills”. If I get in a, once in a blue moon, bill in the mail, I have to keep reminding myself about it. Usually I end up paying it the same day, only to avoid forgetting about it. But I have come upon a month or two where I couldn’t and I’ve had to create a system to make sure the bill doesn’t get forgotten.
  • FLUCTUATING DOLLAR AMOUNTS – Credit card and loan companies are almost guaranteed a set dollar amount each month, but utility, cable, and phone companies are not. Unless you plan for a little extra each month in your budget, the fluctuating amounts can throw you for a loop—especially if you don’t pay attention.

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