The Pros and Cons of Automatic Bill Payment
Let me paint a little picture for you.
You’re just getting a hold of your finances. You decided to go through all your bills and automate them so you don’t have to worry about when what is due. You check your bank account one morning and...what in the fuck?! Why is the account overdrawn?! Oh. Your phone bill was auto-debited but they charged you the wrong amount.
Fuck.
Now here’s another picture.
You’re just getting a hold of your finances. You decide to manually pay all your bills because you don’t want to take the chance of over-drafting your account. You wake up one morning and...what the fuck?! Why isn’t my phone working?! You paid the damn bill! Oh. Shit. You didn’t. You forgot to set the reminder on your phone to log in and pay that bill.
Fuck.
Both of these situations are valid reasons for and against setting up auto-pay on certain bills.
In the first part of my financial overhaul, I only paid things manually. It forced me to be on top of my bills and also on top of my bank balance. I also did this because I was genuinely afraid of a company having my payment information permanently on file. Low-income folks are actually LESS likely to put things on auto-pay because of fears around banking. All it takes is one payment to come out early or one billing mistake on the companies’ part and we’re set back hundreds of dollars in overdraft fees. Especially if it impacts other payments from other companies.
As I’ve progressed, I try to automate my finances as much as possible. I’m fairly comfortable making sure my accounts have the money to cover my bills and I prefer not having to constantly remember what is due when. This didn’t happen overnight.
As someone that does both manual and automatic payments, I’m going to break down the pros and cons. Neither option is right or wrong. It just depends on your preference of how your expenses are handled.
Pros to Automation
Like a 90’s infomercial that repeats in my head too damn much, autopay is the “Set it and forget it!” bill pay option. You don’t have to set reminders or take time to log in or call in your payment. It’s definitely a time saver.
You know your bills will be paid on time. It’s coming out at the same time every month.
Easier to budget around. If you want to schedule a haircut/color but see that your cable bill is due the day before you want to schedule, it’s easier to reschedule the hair appointment for when funds are a little looser or to make sure you have money available for both.
Some companies will give you a discount for setting up autopay. It might not be much but it still lowers your bill.
Cons to Automation
Some companies will not let you schedule with partial payments if you need to break up the cost over more than one paycheck.
If there’s a billing issue, your funds have already been captured. This can have a domino effect if you had other bills posted or didn’t have the funds to cover a sudden bill increase. Now you have more overdrafts or late payment fees. Plus it can take weeks to see refunds back in your account.
You could end up paying higher amounts for not canceling in time. Some bills are contractual and even though your term is up, they’ll still charge you monthly if you don’t remember to cancel or add a month-to-month fee.
Yearly subscriptions that auto-renew can fuck you up if you forget.
Pros to Manual Payments
You can break up payments. Especially if you’re still paycheck to paycheck. Breaking up payments between multiple checks means you’re not spending most of one check on one bill and leaving yourself snug on everything else.
You don’t have to keep payment info on file. This is a big one for people that have a distrust of banking or cybersecurity. I honestly don’t like any company having my info saved, but alas it’s 2021 and that’s hard to avoid. However, it does keep companies from being able to charge you without your permission for payments, late fees, or random charges.
It helps you hone in your budgeting and responsibility. You have to stay on top of your due dates and make sure you have the money in the bank to cover it.
It keeps you in the loop of what your bills’ average amounts are so you know when something looks off.
Cons to Manual Payments
If you don’t remember it, it won’t get paid. I have done this...a lot. I simply forget to put something on my calendar or set up notifications and suddenly, my phone is turned off because I totally forgot the bill was due.
You may not qualify for discounts associated with autopay.
There could be added fees for one-time or phone payments. Yea, I know.
You have to keep on top of due dates. Like physically make time to log in and pay your bill.
Again, there is no right or wrong way to set up how you pay your bills. You’re gonna forget a payment or forget to transfer money to your expense bank account before the auto pay hits. It happens. However, if you find you have struggles keeping on top of payments or making sure you have the money in the account it needs to be in, consider switching up how you plan for your bills.
Budgeting will look different not just for everyone, but through your own life. Some seasons work better for auto payments and others manual payments. Experiment and see what works best for your situation.
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