Reader Story (and Question): Saving Time and Money with Autopay
Published on - September 25th, 2011 (by J.D. Roth) This guest post from Jason is part of the “reader stories” feature at Get Rich Slowly. Some stories contain general advice; others are examples of how a GRS reader achieved financial success — or failure. These stories feature folks from all levels of financial maturity and with all sorts of incomes. Jason and his wife run Gravity Switch, a company that does web development and iPhone/iPad development.
In addition to doing the grocery shopping, I pay the bills in my family. A few years ago, I found out a way to put about $70 back in our pockets every year. Half was expected, but half of it was a surprise.
I’m a big believer in J.D.’s switch from anti-credit card to pro-credit card. I have a rewards card, which I use for everything I can. I pay off the balance in full every month. Because my monthly balance is often over $2,000 (child care, gas, groceries for my family of five, etc.), when I mess up and put the credit card check in the gas bill envelope — or something equally silly — it costs us at least $50 between late fees and interest.
Rather than run the risk of a missed payment, I’ve set up autopay on my account. Since doing so:
- I haven’t paid a late fee ($25 savings a year)
- I haven’t paid interest ($25 savings a year)
- Because I always keep a few months emergency fund in my high interest ING account, I never have to shuffle money to pay
There’s an added bonus. Since my credit card balance is usually about $2,000 a month, and since I’ve set my credit card to pay on the last possible day, I basically keep my money in a high interest savings account for another 15-30 days and earn another $20 a year (at current rates) in interest on that money.
This automation doesn’t save me a fortune, but every little bit counts, right?
You can set up autopay by calling your credit card company, or logging into your online account. It usually takes a month or two to go into effect. You need to provide your bank account number, bank name, and bank routing number. It’s important that you set your credit card to pull the money from your bank (as opposed to trying to get your bank to send a check to the credit card company every month). That way it will always be paid in full without any interaction from you, and your credit card company will be liable if there’s a bank holiday, or if there’s some error in payment so you can easily contest the charges.
I’d actually like to automate more of my financial life. My wife and I own some rental property (our old house is now two apartments), and we’re not always good at depositing the checks quickly. At any given time we might have $2,000 in checks to deposit. So, I’m currently in the market for a bank that allows me to deposit checks using my iPhone.
There are apparently a few services that do this, but the only ones I’ve been able to find are either exclusive (i.e. USAA is only available to members of the armed services) or have a per-check limit of $1,000 and a monthly iPhone deposit limit of $3,000. Since my monthly total is over $3,000 and since some of the rent checks are over $1,000, this doesn’t work for me.
Have you deposited checks with a mobile phone before? How does it work for you? Have you found someplace that lets you do this and pays a high interest rate and doesn’t impose low limits?
And more to the point: What parts of your financial life have you automated? Do you autopay your credit cards? Your utility bills? Your rent or mortgage? Or are you nervous about setting up automatic payments? I’m curious how other GRS readers automate their finances.
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I also own rental property and have my accounts at ING bank. I never touch monthly rent deposits.
Instead I have as a condition in my lease that each tenant uses their “bill pay” feature of their bank to send their rent payment to ING and use my account number. Works like a champ. For tenants who have never done this, I have taken some screen captures to walk them through the process, and everyone has been successful.
And they all appreciate the fact that they can automate recurring monthly rent payments and therefore they are never late with rent either. Win-win.
Best of luck,
S-
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One of my landlords did a variation on this — we had to go to his bank (in town, and it was a small town, so this was just a few blocks from our apartment) and drop off the rent in person. Method didn’t matter — cash, check, cashier’s check, etc. But he never had to deal with checks, and the money was always in there. It was awesome and easy.
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I use bill pay to pay my rent, its one less work for tenants as well.
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It’s not exactly automated, but I mail my deposits to the Credit Union as I can’t get there. I make a copy of the deposit and item, and address the outside of the envelope Attn: P&R Teller. They’ve never failed to be delivered and be deposited. I’ve done it for years, as my dental insurance is deducted from the account and the Credit Union is in the next city over from where I work. That sounds way far away, but is really only 15 miles. When you work, though, that’s a long way each and every month! I have a stash of pre-addressed envelopes and cover letters, and I mail the deposit as soon as the statement comes in. I earn interest, waiting for the draft to come through, and I deposit more than required so I have savings to cover the inevitable out of pocket costs of cavities and root canals … Of course, it is a very low tech solution and does cost postage, but is reliable, effective, and done.
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I like to monitor it myself before I pay it. I still pay it online, but I like to look at every purchase to make sure there aren’t any fraudulent purchases. I also have a reminder notice that repeats every month on a couple days before I absolutely HAVE to pay the bill. Great advice though. There are a lot of benefits to automating your payments and you can still review the purchases.
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I was just going to say the same thing! I always check my credit card statements before I pay to make sure there aren’t any errors. It’s also a double check for any bill that automatically get paid via my credit card (namely phone, internet, cable — I don’t trust my provider with my bank account info!)
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I’m the same way. I always review my statements.
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My credit cards are set up to make the minimum payment every month. That way I never have a late payment fee no matter how disorganized I am. But I’m “forced” to look at the statement before I make the remainder of the balance.
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I have 3-4 bills I autopay and at least 4-5 donations. The 2 from my ckg. have a check mailed to them. My small town does not accept cc’s and neither does this one donation.
I also pay my cc’s online, but I go to my computer and balance my accounts the day after the statements post. I double check that all is okay and then I set up a payment to be taken from my ckg. 2 days before they are due.
I have only overdrafted once in my lifetime and that was the bank’s fault. They put my husband’s check back into his employer’s account. Ugh. So no savings there.
I also do not pay interest to the cc’s. I have no idea of the savings I have gained. However, I do have rewards cards and, in the last 7 years, I have earned over $3k. Lovely money. I usually wait until I have at least $1-200 in rewards before I ask them to send me a check. I can save it or spend it on something nice.
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I’ll think about doing this once I pay my debt down completely. I love the idea of keeping the positive cash flow on your side rather than the credit card companies’.
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I agree with 20s finances. I don’t like automating, though I do pay online. I like having all the bills due at about the same time, usually the beginning of the month, so I can check to see that everything we did last month has been done this month too. In fact, that’s what I’m doing right now… paying the monthly bills for October that have come in so far. The cell-phone bill has a mistake in it and we’ll have to talk to them about it.
Monitoring our credit card spending when we pay the bill is how we keep tabs on our spending since we don’t budget beforehand.
We do have most of our recurring bills that can be paid with credit card automatically set to bill the credit card– that doubles as another check– we see the bill on the credit card. If there’s a mistake and they charge too much it won’t trip any fees like it might if they over-charged our checking or savings accounts.
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As I live in the Netherlands, a lot more automatic payments are possible. I think all banks have the option to schedule automatic payments (once a week, once every 4 weeks, once every month, however you like or need it). This works well if the payment is for a fixed amount (or one that changes only once a year or so).
A lot of companies offer automatic payments; and you can always dispute them if you find them to be wrong or too high (or too low).
I cannot overdraft on my account. If an automatic payment would cause my account to go below zero, the payment will not be made. I will receive a note from my bank that the payment didn’t work, and I will receive a note from the company that they did not receive my money. Most of the times they do not charge a fee, as long as you do pay up within the next 21 days or something.
I have about 15 of these payments per month, on average, and I find it easy enough to keep up with them. I do always check my bank account and balance. I can search through my transactions very easily with my current bank (that does vary a bit per bank), so I can easily see whether I missed a payment or something else odd happened.
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And with “a lot of companies offer automatic payments” I meant that you can give them written permission to take the money from your account every month, even when the amount of your bill varies per month.
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That’s exactly how it works I the US. Wells Fargo and ING both provide this – and I know almost all other baks do also – and I’ve never had a company get upset if I don’t pay a bill within 30 days of getting the bill.
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My life used to be autopay. I loved teh convenience and I also enjoyed the cash back bonuses. I racked up a lot of debt; a LOT of debt. Very recently I decided it was time to get celan and sober debt-wise. This will take years. I took everything off autopay. The main reason is that while on autopay, I never (and I mean never) looed at my credidt card statements. Everything got paid, and then the CC got automatically paid (lowest possible amount) from my checking account. While in theory this was a great system, for us it was a disaster.
So,while we are digging out of debt, we need to know where we are psending our money. It has been eye opening. Also, our cash flow is so tight that we need to control when, and if, a bill is getting paid. We have been at this for several months now and a way out (a long way out) is emerging.
Once we are debt free, or maybe even in a few years when things are under control, I would love to go back to autpoay. I also viewed the cahback bonuses like your company contributing to your 410(K). Free money.
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The key with using automatic credit card payments is making sure you still keep track of a budget, and pay the entire balance at least twice a month or more if possible (in my experience this helps avoid weird restrictions on payments clearing and other restrictions).
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In answer to the question “what parts of your financial life have you automated?” I tend to have more automation on the savings side than the bills. In addition to regularly contributing to retirement, my emergency fund and additional savings fund, I also:
- once a month I automatically transfer a given amount to my “charity” account. I used to end up donating more around Christmas time, so this reminds me to give all year long. I have some regular causes I donate to, but if a natural disaster hits or a friend is participating in a fundraising activity, I don’t have to worry about where the money will come from.
- I transfer money to a “fun money” account for non-necessities like travel, replacing my cell phone, an item of clothing outside my budget, etc. A spending money allowance didn’t work for me as I seldom spent it. Now I collect it for bigger purchases.
Neither of these accounts are part of my net worth calculations. Automating the contributions has helped me make these things a financial priority.
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I agree, automate saving, but not spending. I want to be forced to look at my statements each month. I keep track of my cc purchases (which is basically everything) and then reconcile it against the cc statement when it comes. This checks for fraudulent charges, and also forces me to go to grips with what we spend money on.
The only bills I have on autopay are my utilities (gas and electric). We are on the budget plan for each, so the amount due is the same every month. Even with that, I have to remember to look at the bill each month so I can check our usage.
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ING is supposed to be getting the deposit by phone “soon”. Though it’s said that for at least a year now. You can see it if you logging and go to Transfers&Deposits then Deposit Checks. Until then, I use PayPal. If you confirm enough connections, there are no maximums to the amount of deposits/withdrawals. It usually takes about a week for the check to clear in PayPal. (I assume this would be standard, since they don’t have the actual check.) Then two more days to transfer to my checking account. It’s pretty nice.
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I never give out my banking info. Review the bills when they come in, pay on line using my bank’s post-date payment option, and the bill gets paid 3 days before it is due. Never late, never missed, and i maintain control.
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I would recommend having your tenants set up recurring automatic transfers from their accounts to yours. I have paid my rent this way for the past few years and it has worked out great for both parties. I do not have to worry about sending a check every month and my landlord has a guaranteed payment on the right day every month, and does not have to deal with depositing checks.
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If your bank doesn’t have an app that offers check scanning, you could use the PayPal app. Deposit the check into a PayPal account then transfer to the appropriate bank account (no fees associated). The only downside is that the entire process could take up to 10 days (6 days to see the check on PayPal then another 4 days to transfer).
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Or you could just take the check to the bank and have your money available right away. Sometimes what seems convenient is really massively inconvenient!
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That was easy before kids, but now with our fourth kid my wife can’t make the time, and I’m working from 8-6 most days, we often have 1-2 months worth of checks to deposit at any given time… I’m loving the PayPal idea…
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Charles Schwab, I believe, does check deposit by phone. I don’t have a smart phone, so I’m not completely familiar with this option. But I have seen it advertised. I bank with them (they’re pretty awesome and easy to use), and I mail all my checks in.
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If I was your tenant, that would drive me up the wall. I’d have to constantly remind myself that the balance in my checking account is actually $1000 (or whatever two months worth of rent is) less than what is in there.
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I’ll admit that my bi-weekly mortgage is on auto-pay, but for everything else, I like to look at the bill before I pay it.
For example, I recently switched my electricity provider to another company, which proceeded to jack my rates by 50%. I caught this after one month, called that company for a refund and to switch my service back (which actually worked). I doubt I catch that error if my bills are on autopay.
To each his own, I say, but I’m very weary to give anybody the right to draw money out of my account. But I am a big believer in online payments, which does reduce the chances of check error.
Good luck!
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It would be easy to set up alerts on Mint.com if you were concerned about bills. Set your high limit and if it goes over that you get an email. It would untie you from having to look over every bill that comes.
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thanks for that tip! i hadn’t thought of that. one time my cell phone company messed up my bill BIG time. i had purchased a replacement phone and the tech moved my plan from blackberry to android, but didn’t move over my text message bundle. my bill, with my texting habit, was over $500. needless to say, i got it fixed, but … needless to say, i’m never ever letting that company pull money from my bank account! push payments all the way
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I have some services on auto pay and others I pay manually. It’s about a 50/50 split.
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I was at a USAA blogger conference a couple weeks ago. Although USAA requires membership for insurance, anyone can apply for their financial products (checking, credit cards, investments). You have to be approved for iPhone deposit, and they may be willing to exceed $3000/month.
Fidelity Investments also does iPhone deposit but may limit that service by the customer’s accounts.
It’s worth calling both of them to ask the question. They’re eager to expand their business to new customers in younger generations, and iPhone deposit is seen as one way of doing it.
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USAA has an interesting structure. Its parent company is a “inter-insurance exchange” which is where all of the members, like myself, own the parent company. We pay our insurance premium in, and after the year is over, the profits of the parent company are divided into two categories. The first category is the distribution to the members “Subscriber’s Savings Account” and the second category the company keeps in its coffers to ensure its liquidity. Each year each member/owner gets a distribution from his/her SSA, as basically a dividend. However, once you no longer have an insurance policy with them for 6 month, your SSA account is distributed and you are paid off.
Now there are many sub companies that USAA owns. One is car insurance for children of military. They do not have the benefits above, but they get access to USAA insurance.
Furthermore, the investments and banking arms of USAA have different rules. Anyone is eligible to join. So that means you can join them, and have access to all of your money electronically, make deposits via UPS stores, or by mail.
Please join USAA, as the money it earns on you from the banking and investment arm, a portion ends up in my Subscribers Savings Account!
Cole
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My father was a career Army officer, and is still a USAA member (~60 years now). I’ve been one for over 30 years, with car insurance, household/condo insurance, credit card and investments. I do get a “dividend” as a child-member, but noticed that my father seems to receive an additional payment, as the actual military retiree. I love USAA, and they have terrific customer service!
I autopay everything I can. I like the convenience, and most of my companies send an alert email to review the bill. I have my condo assn dues set up this way as well. My next step is to align due dates a little better with income. I understand some companies will let you change your due date, and I need to look into that further.
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I tried USAA, but *after* I joined they told me because I wasn’t Armed Services I couldn’t use the iPhone App to deposit checks… I had to wait a few months due to some silly law about terrorists, but I’ve now closed my USAA account.
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there is some funnyness about that- i am a usaa member (dad was in the navy), and now my husband is a member; but since something or other he can’t do the check deposits by phone. i don’t remember the exact reasoning but this was like the only option that wasn’t available to him.
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I have USAA and absolutely adore it. I feel about my bank the way that few people feel about anything. I’ve deposited a $10,000 check on my Android phone! Their insurance rates are saving me at least $200 a year. I can withdraw cash from any ATM worldwide with no fees – and if another bank charges me a fee, I get refunded. I’m 23 and will be a customer for life.
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Good that you automated, now make sure to scrutinize bills every month as you probably used to do earlier.
You can automate your rent too. Banks do provide automating bill pay option, ask your tenants to use that function, if available with tenants bank.
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Yeah, I need to get better about scrubbing my CC statements. I do look at them “as well as I used to”, but that’s not saying much…
One of my tentants pays with a bank check and the rest with cash, but I could have him deposit it directly into our local bank… I mean why not?
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I pay my landlady with Bill Pay via my bank, and the money goes straight from my account to hers. It saves us both tons of time and is way easier than using checks.
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In response to your question, I’m a big fan of Charles Schwab investor checking. There is a daily iphone deposit limit of $10,000, and the money is almost always available to use the same day you deposit it. It also pays interest, and has no minimum balance limits.
On top of that, they refund all ATM fees, so you can get money from any ATM and have the other bank’s charge refunded at the end of the month. Very handy if you’re traveling to a city that doesn’t have a branch of your bank.
The catch is you have to have a Schwab brokerage account to use this account. The good news is you can open both accounts together, and you don’t have to use the brokerage account at all–it just has to be open.
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I auto pay any bills I can on my credit cards, AS LONG AS there is no fee to do so. Currently, my city charges a fee to process a CC either online or over the phone. Therefore I drop off my check in their overnight box. That is the only bill besides my charity check to church that I write a month. All others I pay online or automatic draft to the CC. I do not do automatic drafts to checking account for multiple reasons even though I keep a balance that would allow me to do so. I prefer to have the recourse available if there is fraud or an incorrect charge that a credit card offers more than a debit card does. I also switched to paying my credit card balance every “payday” instead of waiting for the $2K balance at the end of the month. The pro’s? You never are late, you never have an “amount due”, you never forget and it is if you were paying with a debit card because you know pretty quick if you have exceeded a budget amount instead of only reviewing once a month. I find I am saving more money by doing this.
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I also pay off my CC every payday (biweekely for me). While I’ve automated nearly everything else, I prefer to do this part manually since it’s a chance to check out everything that’s happened and make sure I’m still within budget. It’s also nice because if I miss doing this one pay period it doesn’t really matter since I’ve paid it off early and won’t have a new balance due for a few weeks no matter what.
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There is a big downside to doing this if you use rewards cards, which is that your rewards process based on your balance at the time they create your statement, not on the dollar amount of transactions that month. I have been slowly moving toward paying everything with my credit card for the rewards…so far this year I’ve received $250 in gift cards for things I would have bought anyway. It would have been half that if I paid the card off every 2 weeks, which to me is significant.
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I am not sure that is true for all credit cards. I use both USBank and Discover, fairly consistently make payments as soon as they show up online (not waiting for a statement), and still seem to be getting the right amount of rewards points. I will make sure to check into that though, thanks for the heads-up!
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Yeah, definitely just ask your renters if they’d be willing/able to do a direct funds transfer. As a twenty-something renter, I love those landlords more than anything, because then *I* get to be automated and not have to worry about running late or my check being lost in the mail (or my balance being inaccurate because they haven’t deposited my check yet, which, if I’m unorganized, can lead to overdraws, but even if I’m not, it’s just annoying to see the money sitting there untouched; if I’m being prompt, the landlord should). And because, come on, it’s not like we want to have to order checks just so we can write 12 of them a year.
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Autopay is a ca$h saver and a time saver. I’ve got everything set up that way. I won’t keep a card (except for Kohls) that doesn’t do auto pay.
For the rental property, consider having the renters’ mail the check directly to the bank. I once had a landlord who went out of town for the winter so she wanted the checks deposited to her bank account. I just told my bank to mail a check on the 24th of the month and it was always there. My bank charged me 25 cents to mail it, but still cheaper than a stamp, my time, (or gas) and I didn’t have to remember to pay it.
Since I didn’t get a receipt, since I didn’t go in, her bank the mailed the receipt to her. How did she tell who paid her rent? I was in apartment 2 so I paid $500.02 , how easy was that?
If you stuck your money into a specific account, you could probably even get a service like Mint to alert you when you got a deposit…
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If you have Chase banks in your area, they have an iPhone app that will allow you to scan and deposit checks. The only thing you need to make it work is an account and a username/password for online banking. I’m not sure if there are limits on how much you can deposit that way though.
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I tried Chase, they have a unpublished $1,000 per day, $3,000 per month limit. I opened a Chase checking account and tried it and it didn’t work, and after a couple of hours getting transfered around I found out about the limit. I had to wait 3 months to cancel the account because of some silly homeland security law thing that supposedly makes us safer from terrorists.
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If you’re not turned off by Chase, it appears they just raised the limit to $2000 per day/$5000 per month.
http://www.androidpolice.com/2011/09/24/psa-chase-increasing-mobile-check-deposit-limits-to-20005000-from-10003000-on-october-2nd-2011/
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First off USAA banking is available to anyone – I’m not military – my father was but he doesn’t use them – it’s only the insurance and other services – though I don’t deposit checks with my phone so I can’t comment on that.
I use the USAA automatic payments for many things including recurring cc payments [because I use the cc for things that recur - it's on file - karate and music lessons for the kids, our wireless bill et al]and things like cable or debt snowball payments.
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lol. I read this as “Karaoke” lessons when I first read it.
I got a USAA and could do everything except deposit online checks…
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Nearly all of my bills are automated, but through bill-payer on my bank website as opposed to the vendor websites. My paychecks are direct deposited, so I have the funds available the same day. I have a payment for every credit card set to automatically go out every payday – this way I don’t worry about missing due dates scattered through the month. I also transfer half of my rent payment out to a savings account every payday, and then transfer the money back to checking when I turn my rent check in. And a transfer to an external savings account that I don’t have immediate access to comes out every payday as well.
This works really well for me, as I’m one of those who if I have the money in my account, I’ll spend it.
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I automate everything. All bill payments, savings contributions, weekly transfers to my and my wife’s personal accounts, direct deposit for my paychecks. I never have to do any of these myself. I even automate my mortgage payment, and it’s over $3900/month. Since what comes out of my checking account is all ore-determined, it’s easy for these automatic payments to be worry-free — I know I wont overdraw the account because I don’t take anything out by hand (that’s what the personal accounts are for).
I think it makes life simpler. All I have to worry about is the balance of my personal account, which doesn’t really matter. I use it to go out to lunch or buy new clothes or whatever, but even if that account is empty, all the bills are already paid.
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Chase bank in our area advertises the “deposit by phone” feature. I haven’t used it, but maybe they’re in your area?
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I’ve managed to get a number of my card cycles moved so that the payments fall due 2-5 days after I’m paid.
I pay my cards in full each month via autopay, but this gives me an additional synchronisation – I can now check how much I have available for the rest of the month
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I’ve lived in the UK and the USA and I noticed that there is much more automation in the UK.
In the UK I pay all of my bills and rent automatically, my credit card is paid off automatically and I transfer my monthly spending money out of my savings automatically. We have a quick look once a month to check that everything has worked, but I don’t really do anything (well, apart from trying to practice conscious spending and happy frugality). In the USA I, and everyone else I knew, did nearly all of those things manually. Funny – so much easier to make ice, so much harder to automate banking.
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I pay my bills online and some of them are automated. My savings are automated too. I set up a payroll deduction and live on what is left.
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We have automated our mortgage payment and savings deposit into long term account. Retirement savings and the pension savings come off the pay cheques. For everything else I do telephone banking (although deposits I still do at the bank, we’re in a small city so it isn’t an inconvenience to get to the bank).
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I think an important point is being missed here: using auto pay is merely a way to make a payment. It has nothing to do with appropriate review of the bill. When the bill comes, common sense dictates it be reviewed for errors, regardless of how the payment is ultimately made. In my case, I use Quicken and download credit card, bank account, and investment account transactions frequently, so I am reviewing them within days of the activity rather than waiting until the statement arrives. For the rest of the bills that are paid automatically (phone, electric, insurance, etc.), I review the bill when it arrives (electronically if possible), and I only take action if something is wrong. There is always plenty of time between when the bill arrives and payment is made to resolve any issues. Automating payments has made my life so much easier that I cannot imagine why I would ever go back to doing it manually.
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I “automate” my budget by allotting only a certain amount to a checking account every paycheck, and when it’s gone it’s gone. I pay for groceries, gas, and fun stuff out of that checking account – basically my standard weekly purchases – and my budgeted bill paying money comes out of another checking account. It’s the only thing I’ve found that consistently works for me, as I can’t seem to stick with using a checkbook register. If I’ve made a few purchases recently, I can simply log into my bank account and make sure there’s still enough money to feed and transport me for the week. Keeps my spending more in control than any other method I’ve found, but I also don’t have to feel bad about spending money if it’s there.
I also automatically direct deposit set amounts into several different savings accounts for biannual/annual bills, travel, “car stuff,” etc…so the savings part of my budget is automated too. As far as auto bill pay, I’ve set it up a few times but always end up canceling after a few months. I find that I’m logging into the various online accounts anyway to make sure the bill is correct, so why not just pay it while I’m in there? The first time I pay a late fee I’ll probably go back to automating permanently, but it hasn’t happened yet.
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I still have 2 monthly bills that I haven’t set to auto-pay to my CC because they didn’t used to do auto-pay to cc’s, just to regular bank accounts. Just sheer laziness on my part to have not checked into it since to see if they now accept cc payments. Thanks for the nudge to check and see if that’s still the case since I’d like to collect some points on those too.
I pay my main CC once a week through transfer when I check it online (it’s directly attached to my bank account). That’s only because I like seeing where my chequing a/c balance is at during the month and I try to keep my chequing account and high interest savings accounts separate (I try very hard not to dip into the savings for normal monthly expenses – just for annual stuff.)
The other CC that only gets used for gas and groceries, I have an auto-pay set up for $300/month (about the average spend for that card per month). I always run a credit balance (maybe $50?) on that card because the opportunity cost for that amount of money isn’t worth the peace of mind for me.
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I can’t live without autopay. I am so forgetful that I will miss making payments. . so far, I am happy with it and i don’t even know what I will do if banks don’t have that features….
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If I have auto pay, and I die, auto-payments will be taken from my account until my executor sends them a death certificate, right?
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I auto pay almost all of my bills. Very seldom write a check anymore.
I also handle the finances of my elderly mother this way. I cosign on her account and can make her bill payments online and monitor her account activity. I also have auto transfer the weekly amount of money I assist her with. Also have auto transfer into my savings and investments.
I have auto pay set up on my checking account to pay my credit card in full each month, but it is my initiation not the credit card company’s. I check the statement each month to make sure the charges are correct. I have the ability to go into my account and change the payment date, amount etc as needed myself in case of dispute. I would NEVER give a credit card company ability to automatically pull from my account. They are a useful tool but their business practices stink. Always keep control yourself.
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I autopay my mortgage by setting up bill pay at my bank for the next 5 years or so. Someday, when I sell this house and move I’ll have to remember to stop it but that is entirely under my control. I do this for my student loan payments as well. For all my other bills, I manually pay them online. All but one is a bill pay sent from my bank. For one credit card I have it set to draw from my bank, but NOT automatically. It is so difficult to get money back that I do not want an accident to happen where the CC company has a glitch and drains my checking account without me knowing which might happen if I totally automated it. As it is, I always have both my CC website and banking website open at the same time to doublecheck things.
Always, I prefer the option that gives me more control.
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Good point about paying on the last day possible. That is what my wife and I do. It only makes a difference if the money you would have paid your credit card company is in an account earning interest those extra 15+ days each month. I see people who pay their bills for months at a time, basically they are lending their money to these other companies at 0% interest.
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The only thing I autopay is my mortgage, and I HATE it. I think it’s BOA that stinks, though–now that everything is set up, I can’t make a change without calling them (and who has time for that?)
I know I’m the odd (wo)man out here. I prefer to make all payments myself. I even prefer writing checks when I can–it keeps my money “real” and not “funny money”. Somehow writing a check for $1000 is just more painful than clicking a mouse, so I’m more mindful of what I’m spending. Of course I pay online as well, but it’s not automated
Also, learn from my (almost) fail–when you have multiple pay from accounts, always double check the account! I use my local checking and my ING checking but every now and then I mix them up which is usually fine (I’m living the YNAB way, so there’s usually money waiting in an account for a future use). But, this month, if I hadn’t gotten a bonus deposit in ING, I would have overdrafted by like $2.00 when I meant to pay from my regular bank.
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What is the YNAB way?
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Bank of America bought the mortgage on my rental house, which makes me work harder to pay it off as soon as I can because I hate their online system. You can’t go online and make additional payments to principal. You can make equal monthly payments that include extra principal, but you can’t just pay an amount when you have extra money. To do that, you have to send a check to a particular address. It’s archaic. And figuring out how to increase or decrease your monthly additional principal payments is mind-boggling–I always have to call and talk to someone because I can’t figure out how to get to the appropriate screen. I’ve had mortgages with other banks, and BofA is by far the worst for online mortgage payments.
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I also pay lots of things by check, but I think this is just partly a function of being older. It gives me a great deal of satisfaction to sit down once a month, pay everything, and mail out a stack of paid bills the next day. I don’t like giving out my credit card number unless absolutely necessary.
That being said, I have automated mortgage, escrow, and some insurance payments. I haven’t really done more in part because my youngest child is living at home while going to college, and sometimes visits questionable websites. I worry about others getting access to our information. I will probably do more online banking when there are no longer any young adults in the house.
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I don’t auto pay anything–been burned too many times to give any bank another chance–and as my landlord lives in my neighborhood and has a wood shop in the basement, I pay cash for rent (as well as everything else). Yes, they still sell receipt books.
Mr. Landlord was dubious when I started paying cash two years ago after years of checks; but now, he likes getting his money up-front no hassle, rather than constantly checking in with the other tenants about either when the check was mailed (or has it been mailed yet? can I stop by and pick it up?), or when the debit can be withdrawn–or why either was refused and negotiating the resultant fees.
No fees with the envelope system vs my interest checking usually ends up costing me more in fees (with all the fine print–which changes daily it seems–and my not being a millionaire) than it pays in interest. I also like having access to my money when I want, how I want, rather than some soulless corp’s discretion…I mean seriously, my bank is holding CASH deposit availability for three days unless you apply for a waiver on EACH deposit. I’m tired of paying them to screw around with my money–lord knows they’ve beyond proven they do NOT have the small depositors best interest at heart.
Then again, my financial goal is to get as off-grid as is currently humanly possible…which is opposite from most other readers here.
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I autopay as much as possible (bills, taxes, insurance, etc.) It leads to more free time for me and I don’t pay any late fees.
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Chase bank will let you deposit with your phone,but it takes for ever for the funds to be released. Another options is to use recurring billing through paypal. It will automatically charge your tenants each month.They can use a credit or debit card. Paypal charges fees but they are deductible as a business owner.
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I use Chase deposits ALL the time. I’ve never had it take more than two days to release the funds, even on 4-figure checks. Even though there’s a Chase bank in the building where I work, I never go to an ATM anymore!
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My mortgage, property taxes and electricty are autopay out of my checking account, but all are on a “equalized payment” structure so I know exactly how much is coming out before it does.
Most of my other bills go onto my credit card and then I just pay that off at before its due.
My paycheck gets direct deposited into my account, along with expense checks.
I write approximately 3 checks a year for the few places that won’t take credit card or debit card and deposit about the same. Autopay, credit cards and online banking mean that I haven’t spoken to someone in my bank in over 12 months, haven’t missed a payment or had a late charge in about 5 years.
I work away from home lots so I could not function, being single, without most of these things.
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My credit union (TruWest) just sent an email saying you can upload checks online with a scanner, so you might be able to find something like that. And my realtor was saying that she has her tenants fill out a form from her bank for automatic withdrawal. Then no worries about cashing checks, late payments, etc.
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I try to automate everything I can. Mine and my husbands paychecks are deposited into our shared account every two weeks. The next day my husband’s paycheck is transferred into our online savings account (we are up to $102,500 for our house deposit) where we earn 6.51% (we’re in Australia). Our rent is also automatically paid out on that day. All our bills are automatically paid onto my credit card (I get a $20 gift card at a department store for every $1000 spent on the card). As most of our bills are the same every month (health insurance phone bills with capped plans, gym, etc) I don’t need to see the bills first. I have added up how much all the automatic bills are (e.g. $500/fortnight) and that is automatically paid onto the card the day after we get our paychecks.
The day before the credit card is due I just check how much is remaining to be paid; which is usually just irregular expenses/splurges (such as clothes or dinners out) because everything else is covered by the $500 auto-deposit. That way I can also see if we have had a particularly expensive month in terms of irregular expenses and decide whether we need to ge more careful next month.
It wouldn’t work for everyone but we are happy with the system.
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between my partner and I, it’s my job to organize the finances. As the longest standing member of the household, he has become the de facto head of household, and collects all the rent and utility money so we send one check instead of having everything split and sent individually. One roommate is also sharing a cell phone plan with us while the other is not. We have 5 credit cards which we are trying desperately to pay down, a student loan, three different medical bills… It’s a lot to keep track of.
Everything going out is through the bank’s bill-pay so it’s all in one place, most of it is automated, but everything coming in is not. This wears on my nerves, but I’ve found I (and we) are more likely to get everything paid on time and properly and save money if I automate the payments anyway. It’s a lot easier to say, “Oh, I’ll pay the electric bill next week, or skip savings this week, let’s grab dinner with this money instead” when the money isn’t automated. It’s also a lot harder for my roommate to find himself short, because he knows the payment is getting made whether he’s paid up or not, and he doesn’t want to screw up OUR budget.
My anxiety levels are high with this system, but I KNOW I’d be more stressed out if we didn’t automate. Two weeks ago I got so stressed with everything and worrying about whether I’d forgotten something that I made myself a checklist. Now I simply go down the checklist and I know I haven’t forgotten anything. It made a HUGE difference, because it ended up just being 4 steps, every Sunday.
Step 1: Reconcile: 8 accounts (3 of which usually only have a transaction or two),
Step 2: Check and split (as needed) incoming bills. While the payments are automated, it forces or reminds me to check the itemized bill every time and check every transaction. The cell phone bill is especially susceptible to fraudulent charges, and our splitting system actually makes me check and type in every single transaction on the bill to assign it to a person (I used BillMonk for this for years, but now every time I log in there is an error and I’m fed up with it. Spreadsheets work fine).
Step 3: Email: WEEKLY email to each roommate individually, showing what they owe, what it’s for, when it’s due, and how much they have paid since the last time I sent them an email.
Step 4: Schedule/check outgoing payments: Quicken lists all the transactions I’m expecting to happen, and every Sunday I go through that and the bill pay system to make sure everything matches properly and everything got paid and entered into the register. Really, it’s just like reconciling an account. I’ve found that the best way to do this (since it’s weekly) is to ONLY allow transactions to be entered that will happen within the next week (through next Monday, really, since Sunday is too late to change automated Monday transactions).
Total time spent reconciling and splitting and emailing and checking? About 20 minutes. Then about 3 minutes entering income Monday morning at the end of my partner’s workweek, and a run to the bank that’s in the grocery store where we’d be going anyway.
Because I split everything into a weekly system, I had to split the rent up too or it confused everything. We save 1/4 of our monthly rent (rounded up) every week, which means at the end of the year we will have an extra month’s-worth of rent plus another 1/3 month (due to rounding) sitting in savings that’s going to the emergency fund. In theory, if there is any money leftover from “last week” Sunday when I reconcile everything, I’ll send an extra payment to the next credit card that’s due (there’s at least one every week). However, that hasn’t happened yet. One week a month we end up with a surplus, but the next week is a big week so it tends to even out.
It’s living paycheck to paycheck, when the paycheck is every week. But the savings is also automated, and since I do everything in “blocks” I end up looking at a lot of total numbers: How much goes out this week, how much comes in. Making the checklist was really the best thing I ever did for myself, because while each step has multiple accounts to check, it makes it seem simple.
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(And because I always need to multi-task: Before I start, I go into iTunes to check if my apps have any updates and download them. About halfway through I sync my phone. Right after the bank stuff, I check my calendar and update tasks/scheduling for the week. It means that with about a half hour of work sitting on my butt every Sunday, we start each week with a clear picture of where we are and what we’re doing. It’s a blessing.)
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I still have to write checks to the city for trash collection and sewer fees for my home and the rental house. I suppose I don’t have to, but they charge a fee for electronic funds transfer so it’s cheaper to pay for the stamp and envelope (the checks are free). That’s interesting reading about the rent payments coming electronically. I’m going to have to check into that for my tenant.
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I autopay an amount generouly more than my usual minimum for each credit card, through my bank’s online system Then I check over the bill when it comes and pay it.
If I’m on vacation or otherwise unavailabe, I don’t have have to worry about the hefty late fees. I have not had a late fee since starting this system. I once had to close an account because the business wouldn’t stop the automatic deduction and the bank said there was nothing they could do. So now I never allow a business access to my account.
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I use the free billpay through my credit union for all of my bills every month and pay the entire amount. I just got my first credit card in 10 years…I was not responsible with credit in the past and have operated on debit cards or cash for the past 10 years. Now that I have good credit, I got this airline miles reward card and put almost everything on it I’d normally use cash for in the first month…and paid the balance in full. Awesome! If I can keep this up, I’ll end up with 3 free trips this year! And, I’m still paying on time.
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Hi Jason
This is a great article!
When I had credit cards, I didn’t auto-pay, because, at the time, I did have free bill-pay (for like 30 days) for a limited period of time, and then the bank would charge $4.95 a month. It would have been a small amount overall, but sometimes the transaction would not occur right away (2 days?). However, to ensure that my payment (for credit cards) did arrive at the bank, I even went to the expense of priority mail.
A few years later, now, I use auto-pay in some areas:
-my aol service is charged on my debit card;
-my gym membership is also charged on my debit card;
-my car insurance was mandatory to charge on my debit card (This is a big one on my to-do list:car insurance coverage and the monthly payments are costing more);
-Church tithing (I don’t itemize, but I know my payment got there and was posted in a timely manner;
-an automatic transfer to savings.
The last one was a recent set-up as a result of the Wells Fargo Way2Save (Premium) Savings program. Also, any debit transactions are tallied daily and a separate transaction is made (each day) when there is a debit transaction (either automatic or in store/on-line).
As I research alternative checking accounts for interest earning and use of budget items, I look into fees and costs that may be associated with making auto payments. For some states, Wells Fargo will charge a monthly fee for use of debit cards and payments. Since I currently live in Nevada (one of the associated states), I was concerned. Turns out my California Wells Fargo checking account will not be affected, at least not yet. If I had closed it, and re-opened a Nevada account, I would be affected.
There are a lot of ins and outs with auto payments, as you are probably aware.
Good luck to you and your family!
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I use Charles Schwab Bank. They let me deposit checks by phone and give me atm fee rebates. I only use automatic bill pay for my recurring student loan and car payment. Paying most bills manually forces me to be aware of my spending.
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