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Why We Auto-Pay Our Bills

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Autopay MachinesLast week, I saw this article in Kiplinger’s where Amanda Lilly and Stacy Rapacon debated the merits of automatic bill-pay. They both make great points, as well as recommendations for products that can help monitor your bill payments, but I think that automatic bill paying wins out. We auto-pay the bills that let us for a variety of reasons, which we’ll discuss below, and we have systems in place to help us manage the process and ensure that we don’t get dinged insufficient funds or other fees.

First, let’s talk about the systems. We auto-pay all of our bills from our Ally account, which is a combination savings and checking account with overdraft protection. Our savings account contains enough cash to coverage a couple months’ worth of expenses and is our free overdraft protection on the checking account, which pays all of our bills. Every month, we get email notifications of our bills and since we only pay two credit cards and a utility bill, I have a good sense of what those values should be. (I also check the credit card bills every month for strange charges)

So far, we haven’t had any problems. Now – onto why we do this instead of pay them manually (especially since it’s just three bills):

It’s Simpler & Easier

The days of sitting on the dining room table and writing checks to pay your bills are over. I couldn’t imagine spending that much time doing that but I understand the comfort in knowing you paid a bill, even if you were dropping it into the mail and had no guarantees your check would make it. :) We spent a lot of time simplifying our finances, moving down to two credit cards and reducing the number of financial accounts we had, and so that’s why our bill pay only involves two credit cards and a utility bill. We get emails from the companies when a bill has arrived, we know autopay is set up, so we just review the tranasctions and confirm our bank account has the necessary funds. It’s simple, it’s easy, and we are assured everything works as it’s supposed to.

It’s Cheaper

Bill pay means we save ourselves time, which is money!, but also we save ourselves a stamp. The current price of a stamp is 46 cents. If you can save time and money, even if it’s only a little bit, it’s a win.

It’s More Reliable

The payments are electronic, which means we avoid the physical mail system and the possibility that something could get lost. I believe that 99.999999% of all mail gets to where it’s supposed to be but I don’t want my electricity shut off because I won the unlucky mail lottery and my utility company didn’t have the brains to ask me about it (which is a bad example because our utility bill payment is still done by check – the bank sends it). Being able to send my payment electronically means I don’t have to worry about the minute possibility that it’ll get lost.

It’s Fun

Ok, it’s not fun to pay bills. Autopay won’t make it fun, but it will reduce the un-fun factor of paying your bills by doing it automatically for you. :)

Do you autopay? Why or why not?

(photo: Killer App)

{ 18 comments, please add your thoughts now! }

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18 Responses to “Why We Auto-Pay Our Bills”

  1. BrianC says:

    I do use electronic bill-pay, but not auto-pay. Why? I guess it forces me to take a close look at my finances each month, as well as catch any fraudulent charges on my credit cards (rare, but they do happen).

  2. Barb says:

    But what are the advantages to autopay? You just described advantages of paying bills online which I would recommend to anyone who has the funds.
    What do you recommend for people that live paycheck to paycheck? (Though, they are most likely not your readers.)

  3. elliott says:

    Originally, my billpay provider would only allow auto-pay of the credit card bill minimum payment, though now they have an option for auto-paying the full balance. Since I’d been in the habit of reviewing the bill before scheduling a full e-payment, I’ve stuck with it.

    Everything else, including variable bills like utilities, are auto-payed.

  4. elliott says:

    “auto-paid”… I’m not awake yet :-)

  5. I use auto pay for our mortgage but manual pay our other bills to make sure we don’t get hit with a bogus charge but I may change to mostly autopay in the coming months.

    I am glad I check my credit card statements though because if I hadn’t I would have been hit with over $3,000 in fraud!

  6. LPC says:

    Although I do pay my bills online, I would never auto-pay. I’ve heard too many stories of companies still dipping into your bank account even though a service has been cancelled (and the ensuing hassle to get a credit) to take a chance. I’d rather be in control of when they get paid.

  7. Ron C says:

    We have moved to electronic statements for everything. I allow auto pay for utilities, phone, and that sort of thing. These charges go to my credit card, as a buffer between them and my bank account. My mortgage sucks dollars directly out of our bank account, however. Each month I go through my credit cards which I have listed on a spread sheet. I download the statements, examine them, and manually make the payment. I record the confirmation code and the amounts in the spread sheet by cutting and pasting, so to minimize my errors. I’ve arranged for my credit card closing dates to be around the 25th of the month. So I know to take care of business at the end of the month, though all have due dates a few weeks after closing. This system is working for me, but my wife who has hand paid bills for years has anxiety attacks, still.

  8. Jim says:

    My fear on doing auto pay is that banks and other companies do run into issues where they debit your account multiple times in error. In these rare circumstances you are out the $ until the issue is resolved which can cause serious problems.

    My solution is to auto pay any eligible bills to a CC and then pay that each month (also can earn points or cashback) and then have a segregated checking account that I ensure has just enough in it to cover other bills who will not allow auto pay to CCs.

  9. Ted says:

    Great article. There more bills I can get on autopay, the better. And it’s almost all of them now. I used to worry that something would go wrong, but now they all offer the service that emails you to let you know they got the payment. It’s really the way to go.
    I haven’t had a problem yet, but i have heard some horror stories about multiple withdrawals, etc.
    Excellent job here, thanks!

  10. mikestreb says:

    I do online bill pay. So I have to look at the bill and put in when and how much to pay. I think that is better than auto pilot to keep from going in the red or paying bills with errors.

    Most of my bills show up right in the online bill pay of my checking account so I don’t have to go to 10 different sites to login to see how much to pay. For credit cards, it gives me the option to pay the minimum payment, statement balance, or some other amount. And it pre-fills in the ‘deliver by’ date so the money shows up in time, but sits in my account as long as possible (I am earning 3.01% on my checking account).

  11. Shirley says:

    Like Ron C above, I use a spreadsheet and carefully examine all CC purchases/payments. I do pay all of our bills online through either our CU free billpay system or by CC (for cashback rewards), but I do not Auto-pay.

    I also have both online statements and paper statements coming because my husband does not use a computer and he would be in a world of hurt without the paper statements if I was to become unable to take care of the finances.

  12. sch says:

    you know i auto payed my student loan to great effect. I also do it for my car insurance and electricity because these are things it’s important not to forget. the others, sometimes, but mostly i set up alerts to remind me of them

  13. jsbrendog says:

    I’m with Brian. I do it manually myself, helps keep my brain fresh with remembering, and allows me to make sure the charges are correct. You have to watch those cell phone providers.

  14. Kimmy says:

    I do pay my bills online. I get an alert from my online banking to let me know when the bill is due. I do not like auto pay; I rather pay the amount I want to send at times.

  15. Jose says:

    I have mixed feelings about auto pay.I’m such a stickler about keeping my checkbook balanced that I want to make every entry when it occurs. On the other hand, I’ve taken over my ageing dads bill paying since he can’t keep up with it anymore. I set all of his bills up on autopay and check his account balance periodically to make sure there’s more going in then going out. It is SO MUCH EASIER!

  16. Sherd710 says:

    I had a car payment bill on autopay as well as a repair loan (through same company) on auto pay. I am glad that after the autopay was debited from my bank acct for both accounts, I found that the $ was misappropriated which would have caused me extra in my repair bill for my vehicle. The took the correct amount out of my account by credited the add’l amount to the principle of my auto load instead of my repair loan. The end result was after calling and speaking with at least two managers who did see even after I advised what amounts needed to go where, the money was moved internally (MANUALLY). I advised them of the principle of Ethics. The Company advised that my repair loan will be paid in full. This just happened last month. Now, I need to see if it was actually done because now, I don’t trust them.


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