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If you are as busy as I am, using auto-pay to take care of payments for everything from our utility bills to those many streaming services is really handy.
The benefits are easy to see: We save time, we don’t have to remember to make the payments each month, and, of course, we never have to worry about late fees again.
But autopay isn’t perfect.
There are some downsides, such as unexpected overdraft fees and the possibility of incorrect charges.
It’s easy to lose control over your budget when you forget that the money will be withdrawn from your account.
In this article, we will cover 24 reasons not to use autopay for paying your bills.
We are going to look at some ways that auto-pay can be more of a hassle than it is worth and how it can cause you to lose control over your finances and, in turn, your budget.
So before you set all your payments to auto-pay, make sure to consider these reasons and decide if it’s the right choice for you.
1. No Flexibility
With autopay, your bills get paid automatically on a specific date every month.
This lack of flexibility can be a problem if you have to change or reschedule payments due to an unexpected money situation or if money is tight.
2. Incorrect Charges
There is always a chance that your account will have incorrect charges when using autopay.
Maybe you were charged twice for something, and if this happens, you could end up paying more than what is owed without even realizing it.
And getting your money back might not be as simple as a reversal. You could spend hours on the phone with your bank and the biller trying to figure out how to get your money back.
3. Overdraft Fees
By setting all your bills to autopay, you may accidentally overdraw your account if you forget to deposit enough money before the due date.
These overdraft fees can add up fast and end up costing you more than if you had manually paid your bills. Also, some companies might charge you fees if your bank reverses the payment.
4. You Don’t Cancel
If you do a trial on something, you can always cancel it if you have to go pay for it when you get a reminder that it is due.
If you put the trial on auto-pay, you may not even remember to cancel and end up paying for it month after month unknowingly.
5. Dealing With Disputes
When there is something charged on your bank account you have to file a dispute to correct it.
This alone is a hassle, but it can become complicated if you have more than one auto-pay and you can’t tell which one needs to be disputed.
6. Overspending
When you pay for something with a card or cash, you have to type the numbers, swipe a card, or hand over the cash, which makes you very aware that you are spending money.
If you have auto-pay set up, you can be spending much more than you realize because you do not have to go through a process each time you pay for something.
7. Credit Card Interest
Credit card auto-pay can seem like an easy option, but it may end up costing you more in the long run.
If you don’t pay your whole bill each month, some credit cards have high interest rates, and by setting up auto-pay, you may only be paying a minimum payment, which means interest is adding up over time.
8. Yearly Renewals
How many times have you got a renewal notice for a subscription or membership at the end of the year, and you barely remember signing up for it?
If you have that renewal set up on auto-pay, you can’t decide whether to renew, and the large yearly sum will come out of your bank account regardless.
9. Bill Fluctuations
Some bills don’t work well with auto-pay due to their variations from month to month, like utilities and phone plans.
This means you have to keep a larger bank balance to cover these changes each month, which can be difficult.
If you pay them manually, you can pay at different times during the month.
10. Information Updates
If you move to a new place or change your phone number, you have to update the information on all of your auto-pay accounts manually.
This can even result in missed payments if you forget to update certain accounts and they don’t accept your payment due to outdated information.
11. Security Concerns
When you set up auto-pay, you are giving the company access to your bank account or credit card information.
If there is a data breach or security issue, your personal financial information can be compromised.
12. Passwords
How many times have you tried to access an account, but the password or email doesn’t work?
When you have multiple auto-pay accounts, it can be easy to lose track of passwords and login information, and then you waste time trying to retrieve or reset your account information.
13. Budget Goes Out The Window
When you set up auto-pay, it’s so easy to forget about all the expenses that are being automatically paid.
This can make it hard to stick to a budget and track your spending because you are not keeping track of your expenses.
14. Difficult to Cancel
Auto-pay is convenient, but it can be a real hassle when trying to cancel.
Some companies make it hard for users to cancel their auto-pay accounts, needing multiple steps or even phone calls.
15. Contract Changes
Another downside to auto-pay is that it can make you unaware of changes in your contract fees, such as your streaming service bill getting higher and higher each time it renews.
Some companies increase prices without letting you know, which can lead to larger than unexpected charges on your account.
16. No Rewards
With auto-pay, you may miss out on rewards or incentives that come with manually paying your bills.
For example, some credit cards offer cash back for certain purchases, but if you have auto-pay set up, you can’t take advantage of these rewards.
17. Computers Can Make Mistakes
While auto-pay is convenient, it’s important to remember that computers can make mistakes.
There have been cases where customers were overcharged or double charged due to errors in the billing system, such as too many zeros being added to the bill.
18. You Move, Your Bills Don’t
If you move to a new address, your bills for your old address will continue to be automatically withdrawn from your account unless you remember to stop them.
This can result in you paying multiple bills for the same service at both addresses.
19. Auto-Pay Not Paying
If auto-pay doesn’t pay a bill at all, and it does happen, the result can be anything from late fees and damage to your credit scores to the lights or water being turned off because the bill wasn’t paid.
It’s important to regularly check your billing statements and ensure that all bills are being paid on time, even with an auto-pay setup.
20. Forget Memberships
Remember in January when you signed up for a gym membership with the best intentions of getting in shape?
Then life got busy, and you never made it back.
Well, if it is on auto-pay, that membership is still charging your bank account every month, even though you haven’t been using it.
21. Stopping Auto-Pay Accidentally
If you make one payment manually, you may accidentally stop an auto-pay setup without realizing it.
It is important to double-check your payment settings before and after making a manual payment to avoid a missed payment or overdraft fees.
22. Auto Insurance
Auto insurance is not a payment that you want left to chance, and auto-pay might go wrong, leaving you without coverage.
If your insurance is on auto-pay, you may miss the chance to review and update your insurance coverage and end up paying a higher price.
23. Rent or Mortgage Payments
Relying on auto-pay alone to pay a bill is not always the best option, and paying the rent or mortgage is one such case.
If your rent or mortgage doesn’t get paid on time, you could face late fees or even eviction or foreclosure.
24. Card Expires
Credit and debit cards have expiration dates, and if you have an expiring card set on auto-pay, it will not go through, and your bills will not be paid.
Another downside in this is that you have to go into your accounts that are on auto-pay and update the information when you get the new card.
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I have over 15 years experience in the financial services industry and 20 years investing in the stock market. I have both my undergrad and graduate degrees in Finance, and am FINRA Series 65 licensed and have a Certificate in Financial Planning.
Visit my About Me page to learn more about me and why I am your trusted personal finance expert.
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