Putting Your Bills on Autopilot: The Pros and Cons

With the click of a single button, you can ensure that all of your bills are paid on time.  You don’t have to keep track of paper bills.  You don’t need stamps.  You don’t have to worry about your check getting lost in the mail.  You never have to wonder if your payment will reach its destination on time.

Sounds pretty great, right?  Well, it is.  Sort of.  Autopay options provide a quick, easy way to keep your bills paid – but they can also make things a little too easy, especially if you don’t closely monitor your billing activity.  While you never have to think about due dates and late fees, automatic payments aren’t 100% worry-free.

Not sure if autopay is right for you?  Here are a few things to consider:

The Pros

Obviously, the biggest benefit of automatic payments is convenience.  You simply opt in to a company or service provider’s autopay option, enter your debit card information once, and your bill is automatically paid on a specific day each month.

A few other benefits of auto pay include:

• It’s fast and direct.  You don’t have to mail anything, and you don’t have to wait for your check to clear.  You don’t have to worry about how long it will take your payment to get where it’s going. 
• It’s (usually) free.  When you mail your bills, you have to pay for postage.  Sure, stamps are only 46 cents – but that can add up fairly quickly, especially if you have several bills to mail out.  Most automatic payment options are free.  If you’re trying to cut costs, autopay is an easy way to save a few bucks a month.
• No late fees or missed payments.  Let’s face it:  People make mistakes.  You misplace your electric bill.  You get busy with other things and forget all about your credit card statement.  Enrolling in autopay is a great way to make sure that your bills get paid – no matter what.   And, of course, when you pay your bills on time you never have to worry about late fees or changes in your credit due to late or missed payments. 

So, there you have it:  Automatic payments are fast, super-convenient, and free.  But before you put all of your bills on autopilot, you should consider a few drawbacks.

The Cons

It’s sort of funny — the greatest thing about autopay is that it makes it easier than ever to pay your bills.  But that convenience can also create a false sense of security:

• It’s easy to miss overcharges or errors.  When you pay your bills with a check or a one-time debit or credit card transaction, you actually have to look at your bill – so you’re more likely to spot a problem, such as an electric bill that’s way too high or credit card purchases you didn’t actually make.  Because automatic payments are, well, automatic, you may not see your bill before it’s paid. 

And, once you pay that bill, it might be harder to get your money back if you overpaid due to an error.  It’s much easier to dispute a charge before you pay it.

• There’s an increased potential for overdrafts.  This is especially true for bills that fluctuate from month to month (such as phone or electric bills).  Let’s say your electric bill has been around $75 for the past three months.  The weather has been pretty nice, and you haven’t run your air conditioning very often, if at all.  And then a heat wave hits.  You’re running the A/C around the clock, and your electric bill jumps from $75 to $175.  If you’re enrolled in autopay, you might not find out about this increase until after your bill is paid – and if you don’t have the extra funds in your bank account, you’re looking at overdraft fees.

The bottom line here is, when you don’t have to read your bill before you pay it, it can be a little bit too easy to miss errors. 

The Verdict

If you’re considering autopay, I’d say proceed with caution:  Read your bills and monthly statements to make sure that you don’t overlook billing errors or fraudulent charges.  And if you plan to automate your electric bill or your cell phone bill, it’s a good idea to always have a little extra cash in the bank to cover a higher-than-normal bill.

Not 100% sure if autopay is right for you?  Try it out.  Start with a relatively small bill that stays the same from month to month.  Subscription-based services (such as Netflix) and gym memberships are good places to start. 

Another option:  If you want the convenience and savings of online payments without the extra worry about billing errors or overdrafts, stick with one-time online payments.  They’re a good middle ground between automated payments and old-school paper billing.