Imagine life without having to pay bills. Talk about heavenly bliss! But the painful reality is that almost all of us have to deal with bills. Some of us are better equipped to handle the stress and inconvenience of paying bills than others. But the good news is that automatic bill pay exists to help make the chore of paying bills a little easier.
Automatic bill pay – sometimes referred to as “online bill pay” or just “bill pay” – takes away the juggling act of remembering which bills are due when. It allows you to schedule your recurring payments online so they come directly out of your bank account when they’re due. Many banks even offer their own automatic bill pay systems, which allow you to view your various bills and schedule their payments in one central spot.
Think about that – no need to keep track of paper bills and making sure you pay them on time. No need to write out checks or purchase stamps and envelopes to mail them. No need to second-guess whether you actually included the invoice or the check in that envelope!
Timely bill payments, incidentally, are one of the biggest factors that make up your credit score. And because automatic bill pay helps you to pay your bills on time, it can have a major, positive impact on your credit report. By having your bills set up to be paid automatically on or before their due dates, you reduce the risk of late payments and resulting late fees - you just need to make sure you have enough money in your bank account to cover your scheduled payments
For this reason, when scheduling automatic bill payments, it’s a good idea to set up electronic alerts if they’re available. These notifications can inform you via email or text message when your payment is coming due, which can help you ensure you have sufficient funds in your account. And in most cases you can also set up alerts with your bank’s Online Banking system, and have them notify you when your account balance dips to a certain threshold.
From a security standpoint, payments made through automatic bill pay are also safer than check payments sent out through the mail. When you make an online bill payment, your sensitive personal and account information is encrypted, keeping it out of the hands of criminals. The same can’t be said of check payments. If a crook intercepts the envelope containing your check payment, they not only have access to your account information, but they’ll likely have your name and address as well.
One potential drawback of automatic bill pay however, is that some consumers may rely too heavily on it to manage their finances. In other words, they “set it and forget it”. When using automatic bill pay, it’s still important to monitor your scheduled payments to ensure the correct amounts are being paid at the right times.
Automatic bill pay can also be detrimental to your budgeting goals if you lose sight of what’s going on with your finances. Even if your payments are coming out of your account automatically, it’s still important to stay organized and on top of how much money is coming in and going out of your account every month.
Another thing to keep in mind that is that automatic bill pay might not be a good fit for bills that fluctuate heavily from month to month, such as credit card or utility bills. For instance, if you end up with a higher bill than expected one month, it could cause you to overdraw your account, leaving you with overdraft or insufficient funds fees.
Overall, automatic bill pay can a great tool to help you manage your bills and achieve on-time payments. It’s just important to remember that it isn’t an excuse to get lazy with your finances.