Starting Out


Should You Pay Your Bills Automatically?

Amanda Lilly
Stacy Rapacon

Stacy says yes; Amanda says no. Here are tips on how to make the strategy work for you — if you want it to.



Setting up automatic payments sure can make managing your bills easier. You can set up bill payments through most checking and saving accounts, and your bank will send the check for you (you’ll even save on stamps). Many vendors also will allow you to set up online payments, giving them the ability to charge your credit card automatically. Some will even offer you a small discount for the privilege.

But auto-pay has its drawbacks. And it doesn't work for everyone. Are you ready to put your bills on autopilot? To help you find the right answer for you, read our arguments for and against it, as well as comments from some of our Facebook fans.

Stacy's Pro Take: Call me a born-again auto-pay believer. More than a decade ago (wow, I feel old), the "set it and forget it" strategy of auto-pay wound up costing me more in overdraft fees than it saved me in late-payment fees. I wasn't carefully monitoring the balance in my bank account and occasionally had insufficient funds to cover surprisingly hefty utility bills. So I deemed auto-pay not for me and went back to very consciously paying bills myself.

Then, about a year ago, I had a baby — and significantly less time to devote to bill-paying. So trying to financially go on autopilot again made sense. Auto-paying my bills allows me to manage my finances in my own time. Simply schedule your payments to be made before their due dates, and you're free to double-check your budget whenever you can without fear of late payments.

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But just like you wouldn't take a nap when driving with cruise control, auto-pay doesn't free you from having to remain aware of where you are financially. You still have to keep track of all your bills and payments, making sure the right amounts are charged and covered at the right time.

To help ensure that your accounts are sufficiently funded, set up alerts that notify you via e-mail or text message if your account has dipped below a certain level. Many banks offer this service, as does our favorite budgeting site, Mint.com.

Budgeting sites can provide a lot of other services to help you stay on top of your auto-pay strategy, too. Besides making it easier to monitor your whole financial picture, Mint can help you make sure you don't get overcharged on any bills you've set up to pay automatically. For example, if you usually spend $80 on your cell-phone bill each month, and you wind up paying $100 one time, Mint can alert you as soon as the payment goes through. (For more information about Mint and our other favorite budgeting sites, see Which Budgeting Site Is Best for You?)



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