Bills are a necessary evil, but they don’t have to be the worst part of your day. In some cases, autopay can be a tool to ensure that you pay your bills on time. While it makes sense to set up certain bills with automatic bill payment, others may not be as well suited for these programs. It’s important to know which ones work well — and why — so you can manage your finances effectively.
Autopay is a method of payment that allows you to add a checking account or credit card to your biller or creditor’s website. When the due date for a bill rolls around, the biller will charge your account and the money will be removed from your bank account automatically.
This method of payment can be a wise decision for essential, recurring bills that do not change in cost. By setting these bills up with automatic bill pay, you can more easily factor them into your budget and feel confident knowing that they will get paid on time.
Some bills — such as utilities bills and variable phone plans — increase or decrease depending on your usage. When a bill fluctuates, it can be difficult to factor the expense into your budget. This can make automatic payments a gamble of how much will be taken out of your account.
You might also not want to put variable bills on autopay to save money. Some billers adjust pricing occasionally, or mistakenly add an extra cost to your account. If your bill is set on autopay, you will not have the opportunity to check for costly mistakes and dispute them with the biller.
If you signed up for a product or service at a promotional rate, you might also want to consider paying your bills manually. This is especially true around the time that the promotional rate expires. Your biller will likely automatically adjust your rate to the standard price, which will be reflected on your bill. If you don’t check your bill, you may not notice this change and miss the opportunity to negotiate the cost.
At the end of the day, you should choose to use autopay if that is what works best for your personal finances and lifestyle. Automated payments help if you are balancing a lot of other responsibilities, consistently keep money in your accounts, and don’t want the stress of remembering to pay bills every month. However, if you are good with bill reminders or need the security of seeing what money is coming out of your account and when, you probably shouldn’t use autopay.
Autopay is not as ideal for variable expenses. By paying these bills manually, you can check your bills for inaccuracies or overcharges, then dispute them with the biller. If you choose to not set up autopay, it’s important to stay on top of your bill dates and approximate payment amounts so that you do not accrue late fees.
Bills that you might not want to put on autopay include:
Unless you’re on a payment plan, utility bills typically change from month to month based on your water, electricity, and power usage. In addition to the fluctuating cost, you might want to pay your utility bills manually so that you can review the charges. With utilities, it can be difficult to overlook small issues. If you have a water or gas leak, your bill can help identify these dangerous and costly problems.
Many phone plans vary from month to month based on your calling, texting, and data usage. Setting up autopay for phone bills could keep you from identifying problems that are running up your costs. Additionally, phone bills may be charged on different days each month, depending on how many days there are. Without a set day to expect funds to be pulled out of your account, you could be taken off guard and accrue overdraft fees as a result.
From time to time, cable companies will adjust prices to align with new channels or offerings. If you do not study your bill each month, you could be paying for services that you don’t even use. Double checking your bill and paying manually also helps if you originally signed up for your cable provider at a promotional rate; if your promotional rate has expired, this could be a great opportunity to negotiate down your costs.
Your health is important, and gyms are a great way to ensure that you’re carving out time for both your mental and physical health. That is, of course, if you are actually taking advantage of your gym membership. It’s easy for the gym to fall by the wayside once life gets busy. If you use manual payments for your monthly membership, it gives you the opportunity to continually reconsider whether the gym makes sense for your budget and lifestyle.
This is another recurring expense that forces you to consider: “Is the cost really worth it?” If the answer is yes, great! If you’ve decided that it’s not necessary anymore, just as well. Now you’ve got a chunk of change to allocate to another area of your budget. This goes for music streaming services, television and movie streaming services, and more.
Those FabFitFun, Beauty Box, and HelloFresh boxes — are they adding value to your life, or are they sitting in the corner of your room (or refrigerator) gathering dust? The same goes for annual subscriptions, like websites, newspapers, and magazines. In these cases, it’s often better to let the subscription service reach out with your bill so that you can decide whether or not the product or service is worth keeping around.
Autopay is best suited for essential, non-variable bills, but isn’t necessarily the best option for every type of bill payer. Autopay eases a lot of the stress associated with remembering to pay bills. It helps you avoid lapses in important services — even if that means you acquire a fee in the process. Automatic bill pay can also be helpful when paying loans since a missed loan payment can lead to a bad mark on your credit report and credit score damage.
Some companies also offer perks, such as discounts and reduced interest rates, if you set up automatic payments. Remember: If you set up autopay, it’s important to maintain a budget and ensure you have enough money to pay your bills in your account by the due date. Autopay is an easy way to rack up overdraft fees by your bank if the biller tries to charge your account but you don’t have sufficient funds.
Some bills that are better suited for autopay include:
Cushion helps you waste less money, save more, and live a financially healthier life. We monitor your bank and credit card accounts 24/7, find and alert you about pesky fees, let you know which fees are negotiable, which banks are cooperative, and can even automatically negotiate on your behalf.* To date, Cushion has secured customers more than $11 million in bank and credit card fee refunds—and we’re just getting started.
*Cushion only negotiates fees with high refund odds. We cannot guarantee any negotiations, a regular frequency of negotiations, or fee refunds—your bank makes the final call.