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Automatic Bill Pay: Worth It?
By Molly's Brother | July 12, 2006
For those of you who stop by my blog on a regular basis, you know that I am a fan of online banking and online bill pay. The ease and convenience of online banking allows for you to stay on top of your bank accounts. It also serves as a way to combat possible identity theft.
I am not, however, convinced that automatic bill pay is worth the “convenience.” Especially for those of you under-30 and those who are only starting to get a handle on your finances. Although, by setting up automatic bill pay, you remove the possibility of incurring late payments (which, obviously, is a good thing), you do run the risk of incurring overdraft fees from your bank–especially if you don’t make that much money and live pretty close to your financial limits. Furthermore, sometimes you forget that you have set up automatic bill pay and companies continue to charge you on a monthly or yearly basis for a service you no longer need. (This happened to me years ago with an online dating site. Eventually, I found success in the romantic realm, but not through the dating site. A year after I signed up, I saw a random charge for $99.00. I called the company to dispute the charge, but I did not succeed in getting the charge removed.)
To Cancel Payments With A Credit Card Although conventional wisdom says that you should call your credit card company to stop payments, this isn’t the case. You should contact–in writing–the company that is billing you. Cancel their services at least two weeks before your next payment is due. However, be vigilant and follow-through. If experience has taught me anything, it is to take expect that few things ever happen as easily as I initially expect.
To Cancel Payments On Your Debit Card Since these accounts are linked through your bank, the approach is different. Notify both the company billing you and your bank. Banks must discontinue payments at your written or verbal request. Again, plan on canceling the service at least two weeks before your next payment is due.
I imagine automatic bill pay is great for those who live with a financial buffer. For those of you who don’t, stay with the ease of online banking. Forgo setting up the automated payments–at least for now.
Topics: Online Banking |
July 12th, 2006 at 10:01 pm
I have one direct debit set up for my phone bill (it was a requirement at the time). I’m reluctant to set up any others simply because I like to plan my payments for days when I know it’ll go through without leaving a shortfall.
But otherwise, I love internet banking and online bill paying. Love it. Could not really do it any other way. It saves time and money on stamps and it’s so easy.
July 14th, 2006 at 5:34 pm
I played around with automatic bill pay, but then I hit a few overdraft fees…so, every check, as soon as my money is direct-deposited into my account, I pay all bills that are due before the next check, it’s way easier that way and I even have a spreadsheet that tells me which bills are due and which of my paychecks they will come from. I’m sure that once I get a handle on my finances, I’ll be able to rely on automatic bill pay…I like your blog by the way. Us youngins’ have our work cut out for us…
July 15th, 2006 at 10:47 pm
Call me old fashioned, but I like writing check and mailing it.
I use microsoft money to keep track of all my accounts. It has been a great tool for bills and deposits too.
July 16th, 2006 at 9:05 pm
For us bill pay works well MOST of the time. But yes, there have been times we’ve overdrawn because we forgot the charge was already taken care of and paid the bill twice.