Not Made Of Money

Let me start by saying that I love using the automatic bill pay that is available with my checking account. Not only do I get out of having to write checks for my regular expenses each month, but I also get to skip going online and scheduling the payments for those expenses. In a few clicks, I’ve told my bank to pay these bills in the way that I want every time a new bill is presented. That’s convenience!

It’s worth discussing, though, that there are some perils involved in using automatic bill payment systems. Like all financial tools, they have to be used responsibly and monitored closely. Here are some of the common problems with these systems:

Overdrawn Accounts: Setting up automatic bill payment for variable expenses, such as a credit card bill, can cause unexpected problems. What happens if you spent a little more than you usually do on your credit card one month and forget about it? Your bank’s system will schedule a payment for the card’s full balance (assuming that’s how you’ve told it to handle those bills) without mentioning that the statement was higher than normal. If you don’t have enough money in your account, you could end up facing an overdrawn checking account and all of the fees that go along with it.

Late Payment Fees: Occasionally, your vendors may change your due date for payments. If you don’t update your bill payment system, your payment could arrive late. That tardiness can cost you heavily as you incur late fees. Some credit card companies will even raise the interest rate they charge you if you don’t make your payments on time.

Inaccurate Charges: Now, I’m not saying that using the online bill payment system will cause your vendors to charge you the wrong amount. However, I’ve found that if I put my bill payments on auto-pilot it is much easier for me to miss discrepancies in my bills. For instance, I may not notice that my phone bill is $5 or $10 higher than normal. If I have an actual billing statement in my hand, though, I will probably catch that extra line item in the bill.

None of these problems are enough to make me wary of using automatic bill payment systems. They do help to remind me, though, that it’s important to stay on top of my finances. I visit my banking website often to make sure that everything is going smoothly.

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