Are automatic payments all they’re cracked up to be?

A few weeks ago, I paid a sky-high electric bill.

After some investigation, I saw the problem: the electric company charged a $200 deposit fee for starting electric service at our new house.

The deposit was supposed to be waived, since we had a good payment history with the electric company. Only here it was, on our bill. And since we’re on autopay, the electric company had already collected payment.

After calling and sorting out the matter, the electric company said they’d give us a credit on our next bill.

That wasn’t a solution I exactly loved, since it meant that our bills would be higher than usual that month. Maybe I should’ve fought them on that, but I didn’t. Also, we could cover the overcharge easily enough, so I figured, what’s the difference?

But it did make me think about whether automatic payments are really such a great idea.

Autopay Doesn’t Mean Autopilot

Autopay is great because it’s convenient, requiring no action on our part to avoid late payment fees. There’s nothing to mail and no logins or passwords to remember. I never have to wonder, “Did I remember to pay the electric bill?”

“Autopay is also an especially appealing feature for young adults just starting out in the real world because it makes it very easy to pay the bills,” says Robert Long, managing editor for Kiplinger.com. “But it can be a trap.”

For instance, bills that have a variable rate, like your electric bill, can be especially tricky to track if you schedule automatic payments to cover them. “My bill might be $50 at one time of the year or as high as $200 other times of the year, depending on how much I’m using the heat or AC,” says Long.

And if a couple of bills are higher than anticipated, you could end up with a low bank balance, or even overdraft charges.

“Giving debtors access to your banking account can open you up to accidental overcharges, whether it’s a legitimate bill that’s just higher than you expected or it’s an accidental billing error where you’re being charged a little or a lot more that you should be,” says Long.

For instance, you might have a recurring annual contract, like a gym membership, that you didn’t want to renew but forgot to cancel. Or maybe you’re disputing a bill, but in the meantime the company is still charging you and taking the money out of your account.

“Autopay can be too automatic,” says Long. “It puts control into the hands of the debtor because they can go into your account. Maybe one time out of 100, there’s an accidental overcharge or you’re getting scammed, but either way it takes that control out of your hands.”

It’s easy to set it and forget it

So why is a service that’s supposed to make life easier so problematic?

For one thing, many of us treat bills on autopay like a Ron Popeil rotisserie oven — we set them and forget them.

For instance, I like not worrying about my electric bill. But I admit that I’m not disciplined about checking the bill every month. And would I notice if the overcharge hadn’t been so large? Probably not. But with no real action required on my part to pay the bill, when life gets hectic, I don’t always review the charges like I should.

Two solutions to autopay problems

As with most things in life, you have to do what works for you, and autopay is no different. As Kiplinger writers Amanda Lilly and Stacy Rapacon discussed in a recent article, there are pros and cons to automatic payments, and sometimes what works for you changes as your situation changes.

So let’s talk about a couple of options.

Option #1: If you hate the idea of letting a creditor have access to your money, then skip autopay altogether. You can still enjoy many of the conveniences of autopay with online bill payment.

“Personally, I recommend going with online bill payment, but not autopay,” says Long. “Autopay puts control in hands of debtors, but with online bill pay, you’re in control.”

Option #2: If you’re concerned about avoiding late fees, use autopay, but use it wisely.

Here are a few ways to use autopay carefully:

  1. Pay with a credit card first. If, and only if, you use credit cards and pay your balance off every month, consider autopaying with a credit card when possible. It gives you extra time to dispute charges and keeps your cash safe in the meantime.
  2. Only autopay set charges and minimum payments. If you’re worried about too many higher-than-expected variable bills socking it to your balance, don’t put those bills on autopay. Just set up automatic payments for the non-variable bills like Netflix. It’s also pretty low-risk to set up autopay for minimum payments, such as on credit cards, to avoid accidental late fees.
  3. Mark electronic bills as high priority. Flag them, filter them, or tag them — just have a system to mark your electronic bills as high priority. It’s easy to let bills get piled under other emails, which means you’ll forget to review them.
  4. Opt for payment notifications. When you set up autopay for a bill, many times you’ll have the option to be notified of the bill via text or email before the payment goes through. So opt in! It’s just one extra assurance that you’ll know what you’re about to pay.
  5. Keep an eye on your bank account. There are a few things you can do to protect your bank account. One, double-check the automatic payments on your bank statement every month to make sure they’re for the right amounts. Two, “make sure you’ve got enough cushion in your account so you won’t get hit with overdraft fees,” says Long. This is especially important if you have variable bills on autopay. And three, sign up for balance notifications to make sure you don’t overdraw. “Set up automatic alerts from your bank or a site like Mint to get an alert when your account dips below a certain level,” says Long.

For some people, automatic bill pay causes more stress. For others, it gives peace of mind. Personally, I’m liking the idea of taking my variable-rate bills off autopay. That way I won’t find out that I’ve been overcharged after the fact. I’ll just pay online each month, which always prompts me to review the bill.

So readers, weigh in! Do you pay your bills manually, automatically, or on a case-by-case basis? What tips or cautions can you add?

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There are 93 comments to "Are automatic payments all they’re cracked up to be?".

  1. Alex says 02 April 2013 at 04:53

    I’m a proponent of autopay, but typically under two conditions:
    1. I’ve had a good experience with the company’s customer service over a long period of time.
    2. The autopay doesn’t result in payment being made 15 days early! (All my other “manual” online bill payments are made about seven days prior to the due date.)

    • Simple Economist says 02 April 2013 at 09:54

      I think working with a good company is important. I tend to me more trusting of companies that have been around and have a good track record.
      I’ve recently noticed several of my online bills give me the option when they want to be paid (if I go through my online bank’s site) unless I use the companies autodraft.

  2. AMW says 02 April 2013 at 04:59

    We only auto-pay our mortgage payment. We get a rebate back on our interest by doing this. We have a seperate bank account set up for this. We have money direct deposited into it from my husbands paycheck and it is the only bill that gets drawn from this account. There is a $200.00 “slush” in the account just in case there is an adjustment for escrow.

    Most everything else gets paid through on line bill pay. I don’t like the idea for auto pay on most things because once you pay the bill you lose a lot of bargaining power in the event of a dispute.

    • Sam says 02 April 2013 at 07:46

      Same, I autopay our mortgages (primary and investment homes) because its a set amount and I want to make sure it gets paid first.

      I don’t autopay any other bills, not phone, not utilities, not insurance. First, I want to review the bills and make sure there are no errors or fraud. Second, I want to be aware of each bill and paying attention to increases due to changes in circumstances (i.e. its summer and our electric increases) or just increases due to increases in the service costs (DirecTV, I’m talking about you). Circumstance increases I wand to see if we can reduce those increases by changing how we use the services, i.e. add a small portable energy efficient AC unit upstairs or resetting our whole house AC so its doing less cooling during the heat of the day. Increase in services, I want to call and see if I can get bill reduced by changing our services or simply asking for a reduction.

      • Bryan says 03 April 2013 at 10:16

        Same! While I pay bills online, I don’t auto pay them. I like to look for issues on the bill before I hand over money!

  3. Adam Skinner says 02 April 2013 at 05:00

    I’m so glad I live in an age where I can automatically pay my bills. Not only am I forgetful by nature, but I don’t want the hassle of addressing these passive cost of living items ad-infinitum.

    By using a “set it and forget it” approach and opting out of communications, this stuff is simply off my radar.

    Rather than putting the power in the hands of the corporation, when appropriate I will simply set up a timed payment through my bank to be sent out. In this way, I retain control, but the process is automated. For items with a variable cost, I will allow a draw, however. At the end of the day, it’s less hassle.

  4. Rebecca says 02 April 2013 at 05:03

    Our bills are set up so that they come to the credit union webpage for review each month. They payments are pushed by the CU, not pulled by the biller. It gives us the ease of automatic online payments but the control of paying manually.
    I cannot stand the loss of perceived control of having billers deduct payments each month automatically but our CU offers this as a good option.

    • EMH says 02 April 2013 at 07:02

      I have the same thing with Bank of America. We use their electronic bill pay site so all our bills are sent there but not paid until I review it and pick what day the money comes out of our account.

  5. Carol says 02 April 2013 at 05:19

    I pay all bills automatically. I review the paper statements as they come in monthly to check for problems. I don’t want the extra step of on-line bill payment.

  6. Mrs PoP @ Planting Our Pennies says 02 April 2013 at 05:27

    We generally autopay on things that are the same every month, and they get charged to our credit card. A couple of times there have been errors and we’ve been able to correct them very easily.

    Variable expenses like electricity and water I like to pay manually to remind us how much we’re using. I’m not sure I would have realized our water bill was about 20% higher this winter were it just being deducted manually and I didn’t have to focus a few minutes of attention on it.

    • Paularado says 02 April 2013 at 11:06

      Same here.

      Our gas company once mis-read the meter and sent us a $1400 gas bill. After that, they will NEVER be on auto-pay!

  7. Michelle at Making Sense of Cents says 02 April 2013 at 05:29

    For most payments, mainly the ones that don’t change from month to month, I pay automatically. If the payment varies, then usually I like to look everything over and pay it myself.

  8. Auntie Seester says 02 April 2013 at 05:33

    Autopay works for my car payment, but I’ve used it for a gym membership before and been burned. I didn’t renew my gym membership, letting the gym know I was leaving. They continued to charge me account.

    I called the management and got things straightened out, or so I thought. 4 months later a collections agency called and told me I owed $700 to the gym. I had to fight to get that fixed. I never will do auto pay for anything that isn’t a car loan or mortgage payment.

  9. Nick W says 02 April 2013 at 05:33

    I put everything on Auto-pay. I set the amounts that is supposed to be pulled as a budget on Mint.com – if they pull anything extra, I rain down hellfire and anger and usually get any issues resolved. No thank you manually paying everything myself. I also keep enough of a buffer in my checking account that if my electric bill IS higher than usual, I won’t be sidelined.

    Also, I know in Virginia, they offer to take the average of your electric bills for the past 12 months and promise you an average exact same rate for 6 months at a time, adjusting accordingly.

  10. Marsha says 02 April 2013 at 05:36

    Autopay is a beautiful thing until it isn’t. I had my mortgage set to autopay until about four years ago, when a computer glitch at the mortgage company resulted in a double payment. My bank paid it instead of refusing it, so I had a negative balance of several hundred dollars. It took 10 days for me to get the money back from the mortgage company since they had to do an “investigation” to make sure that I hadn’t authorized the extra payment. They also had the audacity to charge me $200 in bounced payment fees when they reversed the withdrawal. It took several weeks to get everything straightened out. I even insisted the mortgage company pay the bank’s overdraft fees, although the bank had offered to waive them since I was a good customer.

  11. Jane Savers @ The Money Puzzle says 02 April 2013 at 05:45

    I get paid every other week and I like to pay a portion of the utilities and property taxes with each pay. I am one to two months ahead on each bill and I find it very comforting to have a credit balance.

    I know that I would benefit from reward points if everything was automatically charged to my credit card but I enjoy the flexibility of paying as I go.

  12. Peggy says 02 April 2013 at 05:49

    I do everything manually–any bill that’s worth spending money on is worth taking a minute or two to look over every month, if only to remind myself how much these things really cost.

    • TB at BlueCollarWorkman says 02 April 2013 at 05:56

      EXACTLY! We autopay nothing for this same reason. When we have to look at the bill each month, manually write out a check, and mail it in, we are extrememly aware of each and every dollar leaving our hands and where it’s going. And it allows us to review every single month what is happening with our money! Death to autopay!!

    • Elizabeth says 02 April 2013 at 07:06

      I autopay for some things AND I check every bill, not to mention the bank and credit card statement to confirm when payment goes through. I also take time to read the notifications companies send me about changes to rates, etc.

      I don’t believe in the “set it and forget it” scenario. We need to be mindful about where our money is going regardless of which tool we use to actually pay a bill.

  13. nicoleandmaggie says 02 April 2013 at 05:51

    We autopay anything that can be charged to credit card and manually pay the rest. That allows us to check each month.

  14. Tom says 02 April 2013 at 06:02

    All our bills are automated. I have a “savings” account in CapOne360 for each bill and each payday half of the bill gets transferred to that account. That way I can give the company “pull” access to the account and they can’t get more than they’re due. I get emails with the amount that will be pulled so I can review the totals before they’re paid. Works for me.

  15. Chris says 02 April 2013 at 06:04

    I do everything manually and I am firmly opposed to auto payment systems.

    Now, I think I have a good reason. I get paid every 2 weeks (26 pay checks each year). That means that I get paid on different dates of the month each month.
    In addition, I don’t like money that is allocated sitting in my account. I admit I am more prone to accidentally spend money if it is still in my account.
    So on the evenings I get paid, I spend a couple of hours going over my bill register in detail (Day|Runner Home Finance book) verifying all bills that have been posted, when they are due, and making payments.

    I think paying with auto-pay on a credit card and then manually paying it off could work in a few cases. But lots of services I use where auto-pay could really help (mortgage, utilities, and credit lines) do not allow payment from a credit card.

  16. Kirk says 02 April 2013 at 06:05

    I autopay all monthly bills that have static amounts (and I put my utilities on the level payment plan) and have never had a problem. Auto-pay is great IMO, because it’s just one less thing that I have to do.

    That said, I don’t let anything unexpected get by me. I check my accounts every day on Mint. I watch my money like a hawk!

  17. My Financial Independence Journey says 02 April 2013 at 06:05

    I will use autopay if they bill my credit card. If the company has any problems I can tell the credit card company to stop paying them as I dispute the charges.

    I won’t let any company auto bill my bank account.

    • Jacob@CashCowCouple says 02 April 2013 at 07:04

      +1 on this. Best route IMO.

    • Elizabeth says 02 April 2013 at 09:08

      +1 as well! The only company I let bill my bank account is my insurance company because 1) have a long-standing relationship with them and 2) I have a very good broker to act as intermediary if there’s ever a dispute.

      Any other automatic bills go to my credit card — which gets paid off every month (actually, it gets paid off after I make a transaction in most cases.) I pay my credit card bills manually though.

  18. Tamara says 02 April 2013 at 06:08

    I don’t like having the biller pull money out of my account. i only do that for my student loan and car insurance payments. For the rest, I use Bank of America’s bill pay to initiate a payment automatically upon receipt of ebills. I get an email on the day that the ebill comes in and I have until the end of the day to cancel the automatic payment if I need to. I’m fortunate that all of my bills have an ebill available, except for the car loan. I just make a recurring payment from bill pay for that, since it’s the same every month.

    Also, Bank of America lets you specify a maximum amount for a particular bill. If the ebill is more than that amount, it won’t be paid automatically and you can deal with it manually.

    You can also have Bank of America schedule the bill closer to the due date, but it can only be up to five days ahead. I prefer a more immediate link in my brain between seeing the bill arrive and seeing the money leave my account.

  19. Courtney @ FamilyGoneHealthy says 02 April 2013 at 06:12

    I autopay my mortgage and our Internet bill. The rest of our bills I pay manually so I can check how much of the service we are using.

  20. lmoot says 02 April 2013 at 06:14

    This article sure does speak the troof. After noticing extra charges (they were supposed to be waived) I started checking every statement. I got tired of it because I’m lazy and that’s why I wanted auto-pay in the first place (and honestly I’d probably accidently pay late more often than any mistakes were made by autopay…so thanks to autopay I have 100% on-time payment record).

    To compromise I dedicated my oldest CC, which already had all of my autopays linked to it, as the autopay card. That way I have a general idea of what the cc statement should be and if something looks off I’ll investigate it. Sometimes I’ll get a wild hair and decide to open up the statements when they’re emailed to me, but I no longer feel the need to check every once, all the time.

  21. Juli says 02 April 2013 at 06:57

    I keep a paper chart for the year, with a row for each monthly bill and a column for each month. It gives me a little thrill each time I get to check off another box (yes, I realize that makes me a nerd.) I pay online, but not automatically. I think it makes me more aware of what my money is going to.

    • Laurel says 02 April 2013 at 18:20

      Oh my word, that is EXACTLY what I do!

  22. Christina @ Northern Cheapskate says 02 April 2013 at 07:14

    We are on budget billing with our utilities and autopay with our rewards credit card. We know exactly what amount we’ll be billed each month and pay the card in full. We use the rewards to help pay for Christmas gifts. It works well for us.

  23. Peter Brülls says 02 April 2013 at 07:15

    Question to you Americans: How does your Autopay work?

    Over here in Germany two methods are common:

    a) Setting an automatic payment for a fixed day and some. (Like, say, transfer 1.200 € every month from the Giro to the savings account.)

    b) Let the creditor request the money. Often also for fixed sums, but quite often for irregular sums, like the phone bill.

    The second methods is easily contestable: It’s pretty easy to tell the bank to take the money back – as long as it isn’t fraudulent.

  24. Ed S says 02 April 2013 at 07:26

    I had everything on autopay for five years until I changed bank accounts. (I had issues with the former bank, fees would go up and service would decline each time the bank changed its name… eventually it would hurt to do business with them.) If you have ever tried changing your bank account with every bill on autopay, you may understand what happened next.

  25. Kay says 02 April 2013 at 07:27

    I autopay everything, after I initially set up the account and get through any initial billing.

    What I DO try to do is autopay with paper billing, so I get a bill in the mail (though sometimes over email is the only way) prior to the payment being made. This works for my electric, water, internet, and cell phone bills, which have the habit of changing (only barely) month to month. This allows me to notice unwarranted changes before the payment goes through, which gives me some leeway time.

    As always, keep some slush in your checking account to account for changes to bills!

  26. Grayson says 02 April 2013 at 07:32

    I dislike autopay and tend to decline to sign up. I will sign up for services like Netflix with it, but with variable bills like electricity and others, I just don’t do it. I don’t even pay my mortgage that way. I want to be able to control the flow of my money and make sure were are in the right place when the bill is paid.

  27. The Norwegian Girl says 02 April 2013 at 07:44

    I pay all my bills one by one. I don`t like having automatic payments, because then I get less involved in my finances.

  28. SavvyFinancialLatina says 02 April 2013 at 07:54

    We only pay certain bills on auto pay. For example, we get an extra 1% back if we have AT&T has auto pay. But I check my balance every month.
    We have the security company’s bill on autopay. Can’t wait to get rid of that one.
    Netflix and Hulu are our other auto pay bills.

  29. Carla says 02 April 2013 at 08:04

    I’m still in the dark ages of manually paying most of my bills (online) but it works for me. I do have my electric bill, dental insurance and gym membership on auto-pay though. The electric company emails me about 15 days in advance what my next payment will be. That gives me enough time to call the company if I need to discuss it since the payment is slightly different every month.

  30. Priswell says 02 April 2013 at 08:05

    We have our major bills set to be paid digitally from the bank to PG&E, Mortgage and others, but WE determine how much, and when, it is sent to our primary bills. In other words, it’s not really auto pay. Also, DH is vigilant about checking account balances daily. A few times, this has saved us trouble from troublesome creditors.

    A couple of low-$ bills are on auto pay, such as Netflix, but only because it cannot be avoided.

  31. Nick @ ayoungpro.com says 02 April 2013 at 08:06

    Very well said. I was pretty terrified to put thing on autopay at first, but I have switched most of my payments to this method for convenience. I still watch everything like a hawk, but autopay gives me a better sense of security that I won’t forget to pay something.

  32. M says 02 April 2013 at 08:09

    Have you considered contacting your electric company and asking to be put on a same-pay plan? That’s what I have. We pay the same amount every month and at the end of the one-year period, they evaluate your balance. Then we either pay the additional or they reduce the amount we pay each month. As far as budgeting, you don’t have to worry about a variable amount.

  33. beep says 02 April 2013 at 08:16

    I’m a baby boomer, and I have put every bill I can on autopay. One forgotten bill a few years ago convinced me this was the way to go.

    But I get email notices of every bill 2-3 weeks before it will pay, and I check every one out. I also balance my checkbook (on Quicken) every month. Just because I want to use a good tool to take the pressure of remembering off doesn’t mean I let it go completely. Autopay =/= no attention paid.

    I’ve just finished the process of switching bank accounts. This meant I had to have extra money in case something messed up (bill paid with old account), but it ended up being much easier than I had thought.

    Anything that makes my life easier is ok by me.

  34. edie says 02 April 2013 at 08:19

    I had my electric bill set up so I pay the same amount every month. Check with your utility to see if they offer this option. Payments are adjusted once a year, in March I think.

    I autopay everything I can, including the electricity bill. The only problem I see is that the government restricts us to six electronic payments per account per month. If you try to do more than six, the payment will bounce.

    I do a lot of my banking using the telephone teller (I wouldn’t dream of banking on line), but if I have five or six autopays set up, I can’t always move money over the phone. I have to visit the branch instead, which can be inconvenient.

    • lisa says 05 April 2013 at 03:48

      What do you mean the govt, restricts us to 6 electronic payments per month? Ive never had this problem. I live in USA.

    • Sean P Brown says 08 April 2013 at 12:29

      6 payments a month? Are you in the U.S. That sounds more like an account type restriction than a law. Are you paying from a savings account or a checking account?

  35. Sam Pittsburgh says 02 April 2013 at 09:16

    grerat topic….I only use the ‘one time payment’ each month for my bills….

    I cant give debtors that control to my checking for the reasons mentioned in the article…..it is TOO easy for them to do a money grab…and they like to do that where I live…form the gas company to the water company , etc.

    Credit card payments are great online but some carry fees and I wont pay fees…

  36. C says 02 April 2013 at 09:29

    I don’t use autopay at all. Like others have said, I think it’s worthwhile to go in and review your bill quickly before paying. Especially in the case of credit cards–I know a few times I have though “how on earth did I spend that much money this month???”, and digging into it is always helpful. Even if I don’t discover any signs of a fraud or billing mistake, it’s still a little reminder to me to check in on whether or not my purchases were really “worth it” and I think it does tend to keep my spending in line a bit more than would happen if I were on autopay.

  37. Alea says 02 April 2013 at 09:30

    I use my credit card, GASP! for autopaying four bills: cable, cell phone, internet, Netflix. Each month I pay that in full, because it’s part of the budget, and I never have to worry about a bill not arriving in the mail, (like my cell phone bill one month).

    Also, for those who worry about the bill being higher/different, I get an e-mail from each company telling me what my bill will be and when the payment will be due, so I know ahead of time if there is a problem.

  38. Jen Y says 02 April 2013 at 09:40

    When my father-in-law was dieing of cancer we learned some hard lessons about paying bills. We found after his death that some of his life insurance premiums had not been paid during the chaos for caring for him. So, my husband & I decided all of our insurance premiums would be auto-pay. That way, when unexpected things happen we know our medical, life, home & cars are taken care of.

    Everything else we pay online, unless they charge a fee – can you believe there are some things that do charge a fee for online payment instead of mailing it in!? If there’s a fee that’s more than a postage stamp, we mail it in.

  39. Davina says 02 April 2013 at 09:51

    I’ve never liked automatic payments because it puts the creditor in control of my money instead of me. My only bills are housing, internet and one credit card and I use a Trac cell phone that allows me to buy minutes only as needed. I remind myself of payments due in my daily planner and use online bill pay whenever possible, but avoid automatic payments and just ended my New York Times subscription because of their automatic payment system.

  40. David says 02 April 2013 at 11:20

    I use auto-pay, but I have an app (Mobilligy) that shows me all of my monthly bills. That way, I don’t have to go through the hassle of paying my bills each month, but I just have to look at my phone once a month to see if my bill has spiked for some reason. This app also alerts me if a bill is unusually high.

    -David

  41. GlorifiedPlumber says 02 April 2013 at 12:25

    A cautionary tale to “autopay”. A high percentage my fault, but also a high percentage shady behavoir:

    In 2003, fresh out of college, I got my first credit card. A 4.3% APR alumni card from MBNA (absorbed into BOA). I returned to school in 2005 for a second degree and put part of my education on the card. I made the minimum payments throughout this period.

    In 2006, with a newly minted engineering degree, I was able to put money towards the card balance.

    In 2006, the auto pay option had a “minimum + set amount” option that allowed me to pay the minimum, plus say $300. Once that was selected, the date that it paid the balance was the “due date.” It didn’t list a specific date, it just listed “due date.”

    The issue was, it went into the system as an actual date, versus the “due date.” I.e. it went in on the 15th of the month versus the “due date” which happened to be the 15th of the month.

    I then set it to pay the minimum plus a number, set it to pay on the “due date,” and turned off all paper correspondence, opting instead for electronic correspondence.

    MBNA then upped my due date to the 13th of the month. Since I had opted for no paper correspondence, I never received (to my recollection), that notice. The auto pay date DID NOT UP DATE. It continued to pay out late by two days for 6 months before I caught it. At 3 months in, after 3 late payments, it triggered my default rate. And my shiny 4.3% credit card was replaced with a high 20’s% something rate, and they dinged me for the $35 late fee every month.

    My electronic correpondence consisted of “New bill for you” and “payment received – thank you”. It never occurred to me that the due date had changed or I’d been billed late fees, and was not notified I’d moved into default.

    All because “pay on due date” put an actual DATE into the system instead of non specific, and self adjusting, “due date.”

    Needless to say, when I found out I was livid, and paid off the balance in whole with savings and canceled the card.

    All of this easily my fault, but, demonstrates some incredibly shady behavoir by the credit card company.

    Moral of the story folks, police your autopays regularly and understand fully the mechanics of the autopay.

    • B. says 09 April 2013 at 13:08

      It’s not your fault. You were scammed. MBNA got a well deserved bad reputation for such shady practices. The whole industry tried a lot of shady tricks, but MBNA was one of the biggest offenders. They should have notified you of what was really going on, and they did not, not clearly. They were experts at hiding important information in plain sight, like at the bottom of the page or on the back, in small print, so they could claim they did notify their customers. But they counted on many of those customers missing the messages. And now you play along with them, beating yourself up for trusting them. It’s not your fault they were untrustworthy scum.

      I had an MBNA credit card, and they pulled the same stunt on me. Billed the same time of the month for years, then started this forward creep. My bill was coming due earlier and earlier in the month, and it was messing me up. That was no innocent change. MBNA was deliberately trying to make it more difficult to remember bills, in hopes they could collect more fees and interest. I finally complained, and they said they would stop that. Whether they stopped or not, I don’t know, because I quit using the card, and a year later, they canceled it. Shortly after that, MBNA vanished in a merger.

  42. Laura says 02 April 2013 at 12:34

    Online pay, yes. Autopay, no and never will. Like others have stated, I want to keep control and to know where my money’s going. I don’t ever want my creditors being able to access my money freely; then the onus is on me to prove them guilty when they screw up and take more. My time’s worth more than that, and no one cares about my money more than me.

    Our electric company charges a surcharge if you use a debit or credit card to pay instead of having it come out of the checking account, so it comes from the checking. But only as “pay this one time” each month.

    Our water/sewer charges a surcharge for any online payment, so they get a check each month.

    We really don’t have too many regular monthly bills and I’m pretty organized, so staying on top of it myself is no big deal. We haven’t made a payment late in probably 10 years.

  43. El Nerdo says 02 April 2013 at 12:49

    Last month I canceled Comcast, and this month they sent me a fat bill.

    I called them and they actually owe me money.

    I’m surprised to see Comcast continues with this shady business practice of failing to cancel accounts. Is it to inflate their accounts receivable on the balance sheet?

    Because I pay with debit cards, an automatic charge would have been highly annoying. But I don’t, so all I have to do is wait for my check. See you in 40 days! Can I charge you guys “late charges” for it? You owe me…

    • Holly@ClubThrifty says 02 April 2013 at 17:42

      Good luck getting a refund from Comcast!!!!

      • Carla says 02 April 2013 at 18:48

        @Holly – Actually I’ve managed to get my account credited twice with Comcast (but my account was and is still open). It depends on when you call and who you speak with. Though it works better for me time-wise, calling at midnight (PST) is a recipe for getting lost in translation and frustration.

  44. Jacob @ iHeartBudgets says 02 April 2013 at 13:42

    “bills that have a variable rate, like your electric bill, can be especially tricky to track if you schedule automatic payments to cover them”

    Solution: Get on a budget. Sure, your first year in a new home, it might be tough to anticipate what your utilities will be, but just ask somebody who is in a house. And just overbudget for the expense, and throw the extra back in savings. It’s amazing what getting on a budget plan can do for avoiding overdraft fees.

    Better solution: Get a month ahead on your budget, so all the money you need for the month is in your account when the month starts. Put all automated bills on CC’s (if possible), and you should be able to sort out any mistakes before the bill is due. 🙂

  45. Old Guy says 02 April 2013 at 14:06

    No autopay, only scheduled bill payment from my bank. No one reaches into my account, ever. I only schedule the outgoing, which I monitor. I sign on to my bank every day and check my balances. And yes, a $1300 cell phone bill that was automatically paid is what caused me to go to a “push” only system. But my pushes are not forgotten, because I always know what is going on.

    And if you need a list, NEVER trust water, electricity, natural gas, or cell phone to autopay.

  46. David says 02 April 2013 at 14:16

    Manual pay credit cards, auto pay everything else. I get e-mailed utility bills a few weeks before the charge, so I review them and add them as pending charges to Mint, which then reconciles when the payment comes from my account. Best of both worlds, IMO. Embracing the technology age, acknowledging the .00001% of the time when something goes wrong, finding the right balance of being responsible and diligent without being paranoid or feeling like if I don’t write a check that I’m somehow not in control.

  47. amelie says 02 April 2013 at 18:09

    I sign up for autopay when I can (and on things that aren’t too variable) but I still check the bill itself.

  48. Charles Meyer says 02 April 2013 at 19:03

    This is going to come off as a little harsh but I am going to say it anyway.

    Putting bills on auto-pay and not reviewing the charges every month is not being financially responsible. With things such as Netflix and other fixed subscription type of services I don’t see as much of an issue. Services that can be variable such as electricity, cell phones, and others should be reviewed when the statement is received.

    With all my accounts I have set up for auto-pay, I have only ran into a few snags(biweekly pay schedule and bill due date.) Reviewing my statements as they come in and and verify that I had budgeted that amount for that bill. And if I have questions I can contact the company or research why it is different than the average I pay.

    In instances such as this post, I think we should question our own responsibility than a system that we have set up to assist in our financial matters.

  49. KSR says 02 April 2013 at 20:36

    This is the stupidest American scheme ever. I would say: “Don’t fall for it” but, I know Americans love convenience. If you want convenience, sign up for “adjusted” or “average” billing with your utilities (sometimes they even have savers programs)–so you know what the payment will be every month and *they* adjust every 6 months to your consumption reality by providing you–with prior knowledge–the adjusted and real rate. But, do not sign up for auto-payment–ever. You’re being lazy==they’re being wolves. Mainly on those that cannot afford and probably qualify for some type of assistance.

    First, if you sign up for auto pay…check out and read that “check box”–there’s always a check box. Sometimes it’s harmless–other times….well. That box is your “contract”— and need I despise contracts even one more time.

    You should never ever leave it up to any company to just bill you and collect–ever. Let’s recall Holly’s gym membership and Nerdo’s write up on contracts. Never pre-pay, sign anything, or auto budget. That simple. You want and need a paper trail–even in the age of modernity (like, Nerdo says–40 days to recoup). I swear, old fashioned wisdom will save your ass every time.

    • BD says 03 April 2013 at 00:15

      And your comment is quite ignorant. Americans aren’t the only people who have auto-pay. I don’t even know if we were even the first.

      From a comment on the FreeMoneyFinance blog:
      “We currently live in Germany and you must have almost everything on autopay – we learned the hard way that here you can’t have your bank turn it off, you have to solicit the person pulling from your account ” — Posted by: Deserat | November 07, 2011 at 07:42 PM

      So other countries do have auto-pay, and even more draconian auto-pay than we do….this isn’t an “American” thing. But, hey, go on being bigoted and making ignorant comments, because you know everything, right?

      • M says 03 April 2013 at 05:31

        Just because you’re not responsible enough to handle autopay doesn’t mean others can’t. I’ve got all my credit cards on autopay, but I check them several times a week to make sure no additional charges have been added and that everything balances. I receive e-mail notices when the money is going to be pulled and I follow up the day it’s pulled to make sure everything is correct. With a little effort, you can enjoy the benefits of autopay and remain responsible at the same time.

      • M says 03 April 2013 at 05:35

        Sorry – this was actually a reply to KSR, not BD.

        • KSR says 05 April 2013 at 20:35

          As for you…spending all that time assuring yourself is simply ridiculous and compulsive. Just review and pay the bill with “one time payment’…done.

      • KSR says 05 April 2013 at 20:34

        Okay, we are not in Germany. AND–I’m not sure who convinced corporate that Auto-pay was the way to collect–but, I’m certain (in my head and in my education) that it certainly was an *American* that created the concept. Look it up, I don’t care. But, if you want your bank account number or credit card digits hanging out there in the cloud–to me, “up in the air,” cuz I’m old–go for it. I have no investment in your venture. But, that’s just stupid. You have your digits exposed to unscrupulous collectors and hackers–that will take YOU– time to re-collect, they don’t do it for ya, you know–it’s up to you to prove it and that’s what I meant by the checked box. Simply allowing yourself to review your 6, maybe 7, bills per month doesn’t take much time. Information for the coming month is provided on the current bill–you should be aware of this info so you have time to correct, reduce, etc.. Just press “one time payment” is all I’m sayin–without their ability to save your info. No, I’ve never been screwed and I’ve certainly never been ignorant, negligent, or in debt in anyway. Ha! That’s funny, actually. I’m an ex-attorney—I’d go get ‘em in a heartbeat. It’s in my blood.

        • BD says 05 April 2013 at 22:02

          KSR: Ok, there are you are assuming again (unless the “you” in your comment is just in general, and not directed at me).
          No, I never do auto-pay. I think auto-pay is an AWFUL idea.
          But what I don’t like is when people like you start assuming things about countries, people, etc., and flinging insults. You can say auto-pay is a terrible idea (it is) without insulting entire cultures/nationalities/etc.

        • M says 06 April 2013 at 04:12

          @KSR. I appreciate your concern in reviewing your accounts monthly and making sure everything is accurate. However, autopay works two ways – 1. The payee pulls the money. 2. The bank can automatically send the money (not talking about manual BillPay). For the bank to send the money is perfectly safe. No more risk than sending it yourself through BillPay. I have that set up with some bills. However, with credit cards, I have the banks issuing the cards pull the money. The key is NOTIFICATION. I receive e-mails when the statements are issued, when payment is due, and when the money is transferred. I’m fully on top of everything in my financial life AND I don’t have to go through the process of sending the money myself.

          You addressed some security issues. If an account is compromised, you’re not out ANYTHING. You notify the bank, they cancel that card number, and issue another. Now that is a little inconvenient, but in the last two years since I’ve been doing this, I’ve never had a problem. Not saying I won’t ever have a compromised account, but just saying it is definitely worth it to me to set it and not worry about it. To each his own.

        • KSR says 06 April 2013 at 20:02

          BD–You have made your point. I concur, of course. Though I am not as passionately idealistic as you, I do appreciate the underlying concern and your world view and your “absolute” assertiveness. My point was not to bash America. I’m American. To simply state that Americans seek convenience is not a lie or stereotype–it is fact. Ask anyone in the world! Sorry if that pisses you off again. But, look, this isn’t about that—I was just attempting to establish parameters in the use of auto-pay and, inadvertently, its source of origination. I was stuck in contract law for too long! You are obviously a thinker, BD–I love that. But, don’t hold this against me, because, in the end, we are on the SAME page. It’s madness or euphoria–get me?

          M–No, I’m sorry but that is not correct. The collector, via your bank account or visa/mastercard/American express, still have your digits that are “in the air” and you will still have to write a statement and be without that money until *they* collect on your behalf. Just as the author, here, had to do the leg work. So, saying you’re not out of any money is wrong. You are out of that money, because it’s gone and no longer there to spend–it’s already been pulled. If your budget can handle it, no big deal. If your budget cannot handle an unexpected pull on your account—well, you’ll have to sit out and wait for the refund. I recently returned an extra cable box to my cable company. That company attempted to bill me again via the current bill. I called. They told me they had no record of the return. I had the receipt. I showed up and provided the returned equipment receipt. What I got out of it–—Dr. Seussian DECEIT! But, I win–so no big deal. Paper trail won.

  50. Mr. Bonner says 02 April 2013 at 22:50

    Ugh, I just noticed our AT&T cable bill went up $10 a couple months ago. I need to make the call to see what’s going on. Yet another reason I should go the oft advised route of ditching cable altogether.

  51. Tony@WeOnlyDoThisOnce says 03 April 2013 at 07:29

    Great point about autopay; I think we’ve all run into problems such as these. It is helpful to keep tabs on a weekly or even daily basis, even if it takes just 15 minutes out of your day.

  52. Frank Powell says 04 April 2013 at 05:02

    It is a perfect example of how facilities which are meant for our help, prove to be a matter of inconvenience to us at times. Taking charge of one’s own finance is very important if you want o have an organized life else financial worries will continuously haunt you.

  53. Jesse says 04 April 2013 at 08:04

    I have alerts set up in Mint to let me know if my bills are over a specific amount at any given month, which is a huge help.

  54. Eddie says 04 April 2013 at 10:05

    I refuse to use a billers autopay. I have no faith that its not going to go wrong. I use my credit unions online bill pay to push payments out so I never get the surprise $200 overcharge. I have the mortgage set to auto pay, took 2 minutes to adjust when the escrow amount changed.

    Yes, it takes some extra work… But I don’t want to wait til something bad happens to regret it.

  55. Allyson Carneal says 05 April 2013 at 02:20

    My daughter was born a month early, completely unexpectedly, and spent close to a month in the hospital. Then at three months, she spent 33 days in a hospital on the other side of the state, and I lived at the Ronald McDonald House. I don’t think I opened any of my mail that entire time. My finances would be in shambles if not for automatic bill pay. Ordinarily, I use automatic bill pay but still do a thorough review of my finances every payday (every two weeks) but both of her hospitalizations were completely unexpected. I didn’t have to give a thought to my mortgage, cell phone, or car payment during either one

  56. Jenny @ Frugal Guru Guide says 05 April 2013 at 07:59

    For me, the biggest problem is not noticing when something goes wrong with the payment and I DON’T get charged! I notice if I’m getting charged too much, but too little? That’s happened to me twice in the past year, where it’s take two months for me to go, “Wait a second. I’m not paying for X anymore!”

  57. Marty says 05 April 2013 at 09:52

    I autopay everything using MSN Billpay, even variable amounts like utilities. It’s much easier to simply go in once a month after receiving the bill and alter the payment to be made by Billpay on my behalf. However I have learned to set the dollar amount lower than I expect the bill to be in case I don’t catch it in time before its paid. Simply send another payment to make up the difference. Would rather underpay than overpay my water bill.

  58. KSR says 05 April 2013 at 21:18

    I’m _____ by this. Yeah, I know–go ahead and start calling me ignorant. But, the savings rate data, presented here– skewed. Explained and debated elsewhere in the comments, and with good reasons. I’ve saved 50% percent of my income (for the most part, all of my “working” life). Americans (here we go) do not save enough, but they have ample access to credit and the cheapest living ever known. That’s the difference. When the rest of the world wants to secure their money–they invest in the cleanest of the dirty shirts in the laundry. Americans get the cleanest dirty shirt award–even though that shirt is actually pretty dirty. Thus, we have the easiest credit. Look, don’t do this again…I’m not anti-American, I am an American! Proud of it actually–but I understand the dynamics in world play and have an understanding and appreciation of my genetic predisposition. I prefer to distinguish reality from the “average,” that’s all. Save more, spend less, live below your means. We won’t always be known as the cleanest shirt. That’s all that need be said.

    • Carla says 05 April 2013 at 21:33

      @KSR – Wrong post?

  59. Chip12414 says 06 April 2013 at 21:00

    My rub with autopay is when you have to use a new checking account (such as when your bank or broker merges with another and issues new checks with new routing numbers). You must contact each auto-payee and give them the new routing number. Trouble is, EACH auto-payee has a different procedure for doing this, and even when they CONFIRM the new routing number, they sometimes still use the old account, and then charge a fee when the old routing number is no good.

  60. Marc says 08 April 2013 at 17:02

    A worst case scenario happened a few years ago in Canada because of auto deposit and auto pay. A retiree that pretty much kept to himself wasn’t seen for a period of days and weeks. By the time it escalated into calling the law, they went into his apartment and found him dead in his chair, apparently from a heart attack. The reason no one including the landlord has noticed was because his retirement check was auto deposited into his bank account and his bill were paid automatically. From a calendar he kept up to date on his wall they estimated that he had been dead around 20(?) months.

  61. gina says 16 April 2013 at 06:16

    I don’t like autopay where a service provider takes money out of my bank without my okay (other than my generic ok when setting up the program). I prefer to set up online pay-to accounts with my bank. Then I can program autopay for charges that are regular every month (my transportation pass, internet) and the rest I just type the amounts in each time the bill comes and pick a payment date. It’s super convenient and takes practically no time, but I have control over what leaves my bank account and where it goes, so that I don’t have creditors and service providers automatically deducting charges I may want to contest.

  62. Katie says 07 January 2014 at 18:05

    I have a question?

    I had signed up with a tanning company for a year of automatic withrawal. Now, I know it is my own fault for not paying close attention as to whether or not the $30 payment was pulled out of my account every month. I just assumed it was being taken out. It turns out that it hadn’t been being removed, and now the company wants to charge me a lump sum for what they missed.

    Is this right? It doesnt seem fair based on it being their mistake.

    Thanks!

  63. Justin says 02 May 2014 at 06:02

    I personally love auto payment. I get electronic bills in advance and budget it the same as if I cut the check myself, but I dont have to worry about them not getting my check or late fees.

  64. cecilia griffis says 07 November 2014 at 12:59

    Our furniture payment comes out every month but this month they miss our payment and now we don’t have the money to pay it, they are trying to tell me it’s our fault and we have to pay it or it will affect our credit is this fair?,

  65. Arlene Haylock says 27 May 2016 at 12:31

    I am one of those people who believe a personal touch when it comes to finances is an absolute MUST.. I do not trust any auto-pay institution to safely deduct money from my accounts. I feel out of control financially. Besides, I know friends who have had issues getting auto-payments halted when they find themselves in situations of not having enough money in their account to cover their monthly expenses. However, if in fact you feel it is something you want to do, do it but my advise would be to keep close tabs and be cognizant of your financial situation. This’ll eliminate additional monthly charges.

  66. Mike says 11 June 2016 at 18:42

    I set it and forget it but always check to verify if that makes sense. What I ended up doing is got at least two months of payments saved up and then I turned on the autopay fearture. This was I was covered and I had time to check and make sure things were going through as planned. By starting out this way, I was able to put more money in the account and that would go towards the principle which helped me pay off my loans faster.

    • Jon says 13 July 2016 at 05:42

      A major con of auto pay is you are giving someone access to your account. You may technically have a billing date of the first of the month let’s just say. But if the person wanted to they could charge you at the end of the previous month and if you are on a fixed income and/or have yet to be paid the money might not yet be in your account. I was once charged a relatively small amount of money on the 20th of a month when my billing date wasn’t technically supposed to be until the 27th. Luckily I had the money in there, but still it felt like a violation that someone wouldn’t honor the scheduled payment date and just went into my account and took money out.

    • Segun says 15 August 2016 at 14:23

      Hi Jon,
      I think we need to distinguish between Bill Auto-Payment and what i will call, Auto-Pilot. What people call Bill Auto-Payment is actual Bill Auto-Pilot. Something similar to when an aircraft pilot put on the airplane on auto mode flight session. An auto-payment actually should put the control of what is paid in the hand of the customer and not in the hand of service providers. Setting up bill payments using credit cards or pre-authorised are basically auto-pilot. To me, any automated bill payment system that does not allow me to edit, pause or delete bill payment at anytime is Auto-Pilot and not auto-payment.

  67. mookienae says 26 January 2017 at 05:55

    Auto pay, only for small bills like Netflix, car/life insurance…and have a alarm set in my cell every other day BEFORE the due date to remind me..and once in while i don’t have the money so i have to called the bank and block the payments, which i hate because there’s a fee for that, but at least it a one time fee because if you don’t call and block it, EVERY time the a bill is trying to get the payment, its a fee. The banks are starting to suck to me because there’s TOOO much fees and they are ENTIRELY to HIGH..I am thinking bout putting my bills on auto pay from a non bank card..is anyone doing that, does it work…PLEASE let me know

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