Why You Should Automate Your Bill Payments

Today we welcome our regular Thursday contributor, Daisy Flower.

Hopefully You Don't Have This Many Bills To Pay...

Hopefully You Don’t Have This Many Bills To Pay…

I am one of those people who resisted automating my bill payments for quite awhile before I jumped on the bandwagon. For me, it was the principle of having to go to each of my service provider’s websites or branches and set up the automation. I told myself that I didn’t have the time, when in reality, it was pure laziness.

When I finally woke up and automated the payments, it was a load off of my shoulders. See, I used to forget to pay bills sometimes. I wasn’t deferring the payment because I didn’t have the money for it, but I would get the paper bill and because it wasn’t sitting in my email inbox to remind me that it needed to be paid, I’d forget all about it. Then I’d get a message from my service provider reminding me that my bill was past due.

Automating your bills is the best way to ensure that they are paid on time and in full. There are so many ways that automating my bill payments has made sense:

It Saves Time

Sure, it took a couple of hours out of my Saturday afternoon to go automate all of my payments, but after that, I never had to go and do it again.

My excuse that I didn’t have time to automate my payments was invalid, because I would only have to go to the website of the service provider once, or place one phone call to set up the automated payment system. If you don’t automate, then you have to take time every single month to pay your bill.

It Saves You Money

Listen, we’re all human. We can’t all be on top of everything, all the time.  If you’ve never forgotten to pay a bill, then I applaud your organization skills.  Many service providers charge you a late fee for paying your bill late. Some are kind enough to give you a courtesy reminder before dinging you, but many are not.

Even if it saves you only $5/year in late fees, that’s still $5/year. Furthermore, many companies offer discounts if you automate the bill payment. My Internet provider gives me a $5 discount/month to automate, and our electricity company does as well.

You Have to Pay It Anyway

It’s interesting to see advice that one should only automate bills that are of the same amount each period. While that may give you some piece of mind, you have to pay the bill anyway, even if it’s more expensive from one period to the next.

If you are reading this, chances are you are interested in personal finance, so any discrepancies in your bills (ie if you are overcharged) will be discovered when you review your budget and spending.

Automating Bills Protects Your Credit Score

When I was 18, I signed up for a gym membership. The gym didn’t send bill payment reminders. If you didn’t pay your bill, they might remind you next time you went to the gym and they saw it on your account, but that’s it.

I only used the membership sporadically and forgot to pay my bill one month. A year later I got a call from a collections agency. My credit score was hurt (albeit marginally) because I forgot that bill payment.

Do you automate your bill payments? Why or why not?

*Editor’s Note* P.S. While Daisy makes a strong argument for automating some of your bills, I think there is a strong argument against automating your bills, too. In the end, it depends on which method works better for you, but consider both sides of the issue!

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Comments

  1. Oh, yeah, sounds VERY familiar. I’ve gotten into overdue payments few times in the past and not because I didn’t have the money, but because I totally forgot to make the payment. So my money was sitting ‘nice’ in my account and I’d forget to make the payments. Automatic payments are indeed a great idea.

  2. Automating bills makes me SO nervous. I think it’s because I’m a bit of a control freak but I like clicking the “Pay Now” button. My husband is 100% for automating bills and thinks I’m nuts. It’s a process in our house. Our insurance and car payments are automated but I pay the other things manually. I guess I should get on the bandwagon. 😉

  3. We don’t automate any of ours but I do use a zero sum budget that requires I “check things off” as I pay them. I don’t like giving out my bank account info so that people can deduct their payment. I would rather do it manually.

  4. I still get paper bills in the mail but I log into my bank account and use their bill pay feature to pay the bill each month. I like having the ability to look over the bill each month. I know I could do this when they email me the bill, but I feel that I would put it off or forget to look.

  5. I haven’t automated my payments but I absolutely see the benefits. I probably check my bank accounts at least three times a week so I don’t think I’m in fear of missing anything.

  6. Some of my bills are automated and others are not. There is no benefit for me to automate my rent besides saving .40 cents for postage.

    • Our mortgage is, of course, automated – I couldn’t imagine it any other way. But when we rented, we would just pay via email money transfer or check.

  7. Stuart@DailyMoneyBucket.com says:

    In the UK certain utility providers charge to send you a paper statement.

    So you can save money by canceling the statement. At that stage, there’s a risk that you’ll miss a payment date, so I prefer to automate the payments.

    Then it’s just a case of monitoring the amounts on your bank statement to ensure that no errors have been made.

  8. I started using online banking when I started traveling for weeks at a time. I love it and it works without issues.

  9. I completely agree with Daisy, all bills should be automated. 100% of my bills are automated, and it just takes all the stress out of bills to know there is no chance I will forget a bill and get a late fee.

    One advantage Daisy didn’t mention is that the payments are automatically made on the due date which maximizes the amount of time it is in your account before it is paid. When interest rates rise again that might add to up something.

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