If you’ve never considered paying your bills with automatic payments, you could be missing out on a very beneficial and convenient way to manage your expenses. Automatic payments can save you time and money, help boost your credit, and bring you peace of mind.
Read on to learn more about automatic payments, how to set them up and manage them, and how they can help your finances.
Automatic payments are payments, typically online money transfers, that have been scheduled on a predetermined (and typically recurring) date to pay a bill. Many consumers use them to pay their credit card bills, utility bills, rent or mortgage payments, and other monthly expenses.
Automatic payments are usually set up through your financial institution or the company collecting the payment, and they run automatically without you needing to call in or mail in a payment each month. Once automatic payments are set up, there is no need to initiate individual payments.
Automatic payments have become increasingly popular in the era of digital banking and are now a commonplace financial practice for many banks and other financial institutions.
Most consumers who choose to use automatic payments do so primarily for convenience. Using automatic payments takes all the guesswork out of paying bills, makes it impossible to forget to pay an expense, and allows you to work your payments around your financial schedule.
It is far more convenient to set up your payments once and let them run than it is to have to individually pay bills each month. Especially if you are used to paying bills in person, setting up automatic payments can save you an immense amount of time.
In addition, some companies offer incentives and discounts for customers who pay their bills using automatic payments. These cost savings can add up, especially if you use automatic payments for all of your monthly bills and recurring expenses.
The short answer is that, yes, automatic payments can affect your credit.
Using automatic payments can help improve your credit score, as long as you are paying all your payments on time. For example, if you’re paying your credit card on an automatic payment schedule, you’ll want to time the payment each month before the credit card statement’s due date. This will help ensure that you don’t carry a balance and are paying off your card.
On the other hand, missing even one payment can also hurt your credit score. You will still need to keep an eye on your payments and make sure you always have sufficient funds available to avoid overdraft or bouncing payments.
Automatic payments can be a great tool for those who like to pay off their balance each month. It is a myth that credit card usage is always a bad thing. Responsible credit card usage can help consumers accumulate points and other rewards, boost their credit score, and learn good fiscal habits.
All of the setup and management of automatic payments can be done through your bank’s online or mobile banking services. Some automatic payments can also be scheduled directly with the company receiving the payment.
To set up automatic payments you will need to set a payment date and choose a payment method, such as a credit or debit card. Some companies offer options such as paying five days before a due date or 15 days after each billing statement.
It is equally important to know how to stop or change automatic payments. The good news is that most companies have made it very easy to edit or remove your automatic payments. Keep in mind that if you cancel your autopay option altogether, you may lose any discounts or financial incentives you received when you first signed up for automatic payments.
At Partners Financial FCU, our goal is to educate members and guide them in making the best decisions for their financial health, including the benefits of automatic payments.
Much of your financial decisions revolve around credit. There are a lot of misconceptions involving credit card ownership and use, so you want to be informed and make the best decisions possible.
We’ve even detailed some of the biggest myths about credit cards in a blog post. It should help you get on the right track with one of the most important aspects of your financial life.