The Pros and Cons of Automatic Bill Payment

Technology has made it easier than ever to automate your finances. Indeed, it is a fairly simple matter to just put things on automatic. From direct deposit for your paycheck, to automatic debit for your bills, to scheduled transfers to help you move your money around, there are a number of ways for you to automate your finances, streamlining things so that you don’t have to think too much about making sure your bills are paid.

While automatic bill payment can be a real boon to some, though, there are some disadvantages. Before you decide to set up everything on automatic bill pay, consider the pros and cons:

Advantages of Automatic Bill Payment

For the most part, the main advantage of automatic bill payment is the convenience. You can set things up so that your bills are paid on the same day of each month. You can arrange to have your auto loan deducted from your bank account on a certain day of the month, as well as schedule regular monthly payments to be made on your credit cards, or schedule transfers to your savings account from your checking account.

All of this is very convenient. You just set it up once, and then every month your bills are paid. You don’t have to try to remember to send a check on time. You don’t even need to remember log in to an account and direct that the bill be paid. It just happens. Not only is this very convenient when you are at home, but it is also quite convenient when you travel. You don’t have to worry about missing a payment date because you are out of town, and you don’t have to worry about trying to pay early to avoid late fees. The set it and forget it approach to paying your bills can provide peace of mind as well as convenience, since you always know that your bill will be paid on time.

Disadvantages to Automatic Bill Payment

While some find automatic bill payment convenient, others might have difficulties with automatic bill pay. One of the biggest issues is that you have to make sure that you have a enough money in your checking account to cover the bills. If you don’t have the money, you find yourself facing a big financial mess. Usually, one of two things is likely to happen:

  1. Your payment is rejected: If you don’t have enough money, the bank may reject the payment request. As a result, you will have to pay fees to the biller and the bank. On top of that, if you are paying for a service orĀ utilities, it might be stopped.
  2. The bank covers your payment: Even if the bank covers your payment, things can be costly. You may still have service, and you may avoid fees charged by the biller, but the bank will likely charge you overdraft fees. And, of course, that can start a chain reaction that doesn’t stop until you owe several hundred dollars.
If you don’t have a regular paycheck, or if you have a hard time tracking and managing your money already, automatic bill payment might actually cause more problems that it’s worth.

Bottom Line

For those who plan their finances, and are sure to have enough money in their checking account to cover their bills, automatic bill payment can be a big help. It’s convenient, and prevents the need to constantly be checking up on things. If, however, you are unsure that the money will always be there when the automatic withdrawal date arrives, you might consider holding off on automatic bill payment.

About the Author

By , on Sep 6, 2011
Miranda Marquit
Miranda is a professional personal finance journalist. She is a contributor for several personal finance web sites. Her work has been mentioned in and linked to from, USA Today, The Huffington Post, The San Francisco Chronicle, The New York Times, The Wall Street Journal, and other publications. She also has her own personal finance blog: Planting Money Seeds.

Leave Your Comment (5 Comments)

  1. Paul says:

    I use bill pay for most bills, it saves me time that I can spend on other things. Another option is use your bank’s bill pay option and schedule them manually if you are concerned about bouncing a payment.

  2. SophieW says:

    Another con of paying bills automatically is once someone is comfortable with all the bills being paid, sometimes a company will raise its rates and if you’re not paying attention, it can lead to a bit of a loss.

    A few months ago the deal I had worked out with my telecom ran out and it took 3 months before I realised that I was paying an extra $35.00! All I was doing was checking to make sure the money went out, not the actual amount…

    I called them real quick and reinstated the deal and even managed to get the current month price retroactive, but I still paid more than I should have for those few months!

  3. Kris says:

    The convenience of online bill paying far outweighs any drawbacks. I only wish more companies accepted electronic payments from my bank, but you can still pay online but the bank mails a check.

  4. Benard says:

    I like it because I don’t have to write checks…I hate writing checks.

    But I only use this when I know that the charges are fixed, like my internet bill. For charges that fluctuate, I pay online when I can.

    Whatever can make life simpler…

  5. krantcents says:

    Automatic payments does not relieve you the responsibility of your account. You still need to pay attention!

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