One common recommendation for new parents is to save time wherever you can. So tonight, for the very first time, I have signed up for the AutoPay feature for my most heavily-used American Express card to have it pay the credit card bill in full each month by withdrawing money from my bank account automatically. I don’t have to do anything.
Usually, I don’t like giving any vendors the right to suck money (“pull”) from my checking account. It feel invasive, somehow. I prefer to use my bank’s online BillPay feature to send (“push”) money after I get my paper bill and verify all the charges are legit. I also like to see my electric bill to monitor our power usage, and the water bill to make sure there aren’t any leaks, etc.
However, with a newborn I can potentially imagine forgetting to pay a bill, so maybe automation is a good idea. I have never had any problem disputing a wrong charge with AmEx, and I have an checking to savings overdraft buffer at Ally Bank so I won’t be dinged with overdraft fees. If it works out, after looking around it appears that almost every bill that I have can be set to AutoPay. What you do think?
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Autopay everything. You’re never late with a payment. You open up space in your brain. You save money on stamps and checks. No special calendar or spreadsheets to keep track of bills. It serves a governor on spending too.
http://sunkcostsareirrelevant.com/2012/01/5-good-reasons-to-autopay/
Yes for everything I can, although I prefer to do it manually. Mainly because, when I’m manually focused on it, I’m much more confident everything will get paid on time.
I started doing more and more auto-pay because I started getting more and more distracted about managing my finances manually. Bills were starting to slip, so that obviously wasn’t working.
Jonathan, It seems you have considered this – will the CC companies let you dispute a charge if you have already paid the monthly bill? You are assuming that because it hasn’t happened in the past that in the future you will never get an incorrect charge against your card. Everything I have read indicates you should not pay the bill until the disputed charge is resolved.
I use it for electric and any bill that does no change moth to month. Actually the electric is the only vendor that comes to take. The other autopays are set up using my bill pay scheduled to push monthly. Never had any problem or trouble. And being I have solar H2O and PV on my house, the monthly electric is very little; plus they email me the bill 5 days before it is withdrawn from my account.
Before Wachovia became Wells Fargo, I only used autopay for my electricity bill I think (and maybe one other). After Wells Fargo came into being, it became much harder for me to know when I had a bill due because the billpay interface was not as clear (to me). I would never know when I had actually received an ebill or know whether or not it had been paid. It became very frustrating. So, now I have everything on autopay. It has made my life much simpler.
Oh, one other note: I recently did this for my AMEX card and while it appeared that I was enrolled instantly, it took at least one billing cycle before it actually came into effect. So, I ended up with a late fee, which AMEX waived when I called (twice). It was not as smooth as some other credit cards but it worked out.
I push everything accept my mortgage, which is the same amount and day each month.
i used to pay everything manually. when i had lots of bills and lots of balances on lots of credit cards, this worked out well. i was always in bill pay mode.
as bills and cards got 0-ed and i had less to pay, it worked out worse and worse. when i started being 0 to 30 days late on a payment about once every 6 months or so, i realized i needed the automation.
all my bills are currently auto paid now.
the way i handle my Credit card that i use for day to day puchases (pen fed thank you jonathan) is to have it pay a flat dollar amount every friday.
i know if my balance is ever over 4* that dollar amount i need to do some math to make sure i wont carry a balance that month.
when i make a non standard purchase (for example vacation) i try to 0 it right after.
I use autopay wherever I can. Only problem is for one credit card I was late because I forgot I didn’t have autopay for that account. Fortunately a call to customer service cleared those charges.
I put my basic utilities — electric, natural gas, water, and phone — on autopay back in the days before anyone had even thought of online bill payment. I’ve always been a bit amused with the fascination of paying these bills online, when ACH systems — an old but proven technology — has been around for a long time and works just fine. And in my opinion, it’s a lot easier and more convenient. I get my bills — some still paper, some online — mark them in my checkbook, and forget about it.
Credit cards I’m a bit more picky about. I do use online bill payment because I sometimes am transferring funds between accounts to cover certain card payments.
And there are two billers I wound never give access to my checking account on an autopay basis. First is my mortgage company, because they have screwed up things in the past. Second is my cable company — just on principal, as I — like most people — hate them with a passion and would never, ever trust them with access to my checking account.
Whoa, are you a new parent or are you expecting?? I guess i can do a search and see if you mentioned this before, and i’ll do that after leaving a comment. But it will be wonderful to read about how the new addition adds perspective and a whole new array of planning into your life! If you do have a new one expect your already large audience to grow leaps & bounds!!
Regarding the auto-pay, i only use that on certain utility bills, school loans, auto-loans and home loan — bills that tend not to change significantly from one month to the next. For all the other bills though i still like to push the payment and see what amount i need to push before-hand.
I use it for everything but credit cards, though I wouldn’t have big qualms about putting the credit cards on auto if my habits changed so that I started being late. One option to look into is whether your bank’s bill pay can electronically grab the balance from your biller and pay that amount. I don’t have anything set up that way but I think it’s an option on my bank’s site (Schwab). Kind of a compromise between auto and manual, since you wouldn’t have to trust the payee company to stop or modify an amount if you notice something amiss before the payment is sent.
One downside to autopay is that it makes it harder to switch checking accounts (but only slightly).
Got burned a couple times with Autopay, so I only use it in 2 cases: Credit Cards for Minimum Monthly Payment (so I won’t be hit with late fees if I’m carrying a balance) or utilities that I have on equal payment plan.
Otherwise, it all goes into a Google Docs spreadsheet, so that I can get to it from anywhere and when I have a few minutes at work or *$, I can catch up on what is due and what has cleared.
The Alltel $600 that came out of my bank account one time because of bad data overages caused me to rethink my strategy. Took 6 weeks to get the money back 🙁
I try to apply the concept of ‘separation of concerns’ to many areas of my life, including personal finance. There’s no sense using a sub-optimum tool (eg., my memory) to do the job, so I let Mint do what it’s really good at (ie., tracking my spending) and let Autopay do what it’s really good at (ie., not forgetting to pay my bills.) It certainly works for me.
If you use Mint or any of those personal finance tools then the decision to switch to AutoPay is very easy. Even if you don’t review Mint very often you can just set limits on the categories that you want to pay particular attention to such as “Utilities” and Mint will send you an alert if the bill exceeds your limit.
AutoPay is definitely the way to go.
All my bills are automated. If they accept credit card, I give them a credit card. If not and the amount is fixed (mortgage for example), I push from my bank account. If the amount is variable (credit card for example), I let them debit from my bank account. I still look at the bills. I just don’t worry about when the bill is due or any manual steps to pay it.
Autopay:
+ Credit cards in full every month from checking (except CCs which I’m taking advantage of a BT or 0% APR, those make minimum payment each month. In Yodlee I edited those account details to make a note of the final date of 0% so when it approaches I can switch back to full payment)
+ Internet bill (charges to CC)
+ Rent from checking
Manual payments:
+ Cell phone (on family plan, so I pay my share 1x/month from CC)
+ Utility bills – gas and electric have autopay option but I use Chargesmart.com to manually make no-fee/rewards-earning payments from Discover. Water bill does not have autopay option, push from checking.
I try to put everything I can on autopay. For me, time is money. I prefer to make everything go onto my credit card where possible though. That way I can still get cashback on all of those monthly payments. I think autopay is especially helpful for people who don’t always remember to pay their bills on time and sometimes get late fees. You just have to make sure you either have overdraft protection or always enough money in your account.
I only do automated bills if I have no choice or it saves me money. I like being in control of when my bills are paid.
If they accept credit card, then I have it auto debited from a credit card ie. cell, tv. Mortgage and fixed amount are auto pushed from my bank. The others utilities and CC are manually pushed in case I need to pay from a different bank account.
I autopay everything. I wrote about autopay and overdraft a long time in this article:
http://www.saveinvestgive.com/2007/03/financial-autopilot.html
I would never recommend anyone sign up for auto-pay – although the chance of a mistake happening is tiny, it does happen – people have bank accounts emptied and it can take days or even weeks to resolve – if it can be easily resolved at all (imagine your electric bill is usually $100, but they bill you $10000 instead because they think you actually used that much electricity, and you have trouble convincing them otherwise…).
I do something that is fairly unusual I use the service paytrust from intuit: http://paytrust.intuit.com/index.jsp this is not a free service, but it has 2 great features that make it killer in my opinion. 1) all your bills go there (including paper ones, you have a PO box with the service and they will scan them in, so even oddball stuff like landscaping services or whatever works), you get an e-mail when bills come in letting you know when they are due and how much is due. Then you go to the website, check the boxes of all the bills you want to pay, click pay, and it schedules them all. 2) is not so much a feature as a bit of freedom, since I’m using a 3rd party bill pay service, I can switch banks with no trouble at all – the only thing that actually goes through my bank is the direct deposit – so changing banks for me is a) change my direct deposit b) link new account to paytrust. A lot of people cite the difficulty in moving bill pay as a key reason for not changing banks even if you are not happy with them. $10/month for the service is not free, but it’s fairly cheap and I’ve found it invaluable (I started using it more than a decade ago when I was in much debt and managing a whole lot of CC payments). You get 25 “transactions” in that $10/month, a transaction is either a received paper bill, or a payment (a lot of bills come in electronically now). Another plus is that most of the payments are next day, even some you wouldn’t expect (I have some places that have no e-bills, but because of the relationships that paytrust/intuit has with the banks, they know how to send the money as an ACH transfer even if it’s not an option directly from the biller sometimes).
Also the very few problems I’ve had over the years, tech support has been very responsive.
I never allow pull from my bank account, but I will sign up for autopay from a credit card whenever possible. This gives me a buffer so that when a biller makes a mistake (it happens!) then I can have the biller fix it (or dispute it through the CC if necessary) and my checking account balance is not affected. It’s also a way to accumulate points on the CC.
I push my credit card in full every month — manually from my checking account’s online bill pay. But to avoid getting dinged with a late fee in case I have a busy month and forget to schedule the payment, I have an auto payment set up every two weeks for double the minimum payment. It’s saved me a couple of times — I have to pay a few dollars’ worth of interest, but I save the $40-ish late fee.
For payments that are the same every month/quarter/etc, I just set up an automatic payment and forget about it.
I auto-pay everywhere I can except for credit card bills. For these I want to verify the charges before making the payments.
For credit cards, my only auto-pay is for the minimums, and that’s set for early in the credit card grace period.
I manually schedule the remainder as close to the due date as possible, but the auto-pay will save me if I ever mess up. I haven’t messed up yet. (cross fingers.)
With other stuff, my cell phone, Netflix, and cable are all auto-pay using a cashback credit card.
I quit using autopay after a bad experience turning it off. I did everything I knew to prevent an autopay of a bill I disputed from happening. I sent certified a letter retracting autopay authorization to the company and formally informed my bank of same. I was told by the bank that they could do nothing–I’d have to close the account to prevent the autopay. The company took the money, ignoring my letter. No more autopay for me after that experience, which was many, many years ago, but I can hold grudges. 🙂
I use auto-pay for bills that can be paid with a credit card (cell phone, etc). However, for bills that can only be paid by drafting my checking account, I pay those manually. The reason I do this is I keep all of my cash in the bank’s savings account, and transfer to checking and pay the bill as needed, that way I hold onto the money as long as possible earning .5% interest. better than nothing.
I use auto-pay for everything I can. I also set up a budget category for the utilities in mint.com. If anything goes over the limit (high water bill due to leaky faucet as you mentioned), I expect mint to send me an alert.
I automate everything I can.
I set up everything I can for autopayment on my credit cards as my first choice. That way I maximize my rewards. I also then auto pay a couple of my credit cards just to make sure they’re paid on time consistently. They’re not my primary card so I only have misc purchases on them. The primary card I pay manually as the bills for that one can be much larger and I want to manage that.
If a bill won’t take credit cards then I use the automatic bank withdrawal method.
Autopay all the way. Just remember to check those bills for mistakes. It’s very easy to forget when you don’t write the check. I still continue to request paper statements. One, I work in the printing industry. Two, it’s just easier than checking it online.
I marked “only some bills” in the poll, but the truth is I only do that for my cable bill, and it is paid on a credit card. I would never have an autopay come from my checking account – too easy to forget it is coming and not having cash in the account. Most bills are paid with the BillPay feature of my checking account (First Internet Bank of Indiana) and most of those are setup to send me a notice will a bill is available.
Like others I auto pay where and when I can but not from my bank account but rather via a credit card. I then push the credit card bill. Cash back on the cc this way versus none via a direct pull from my bank account. No need to keep excess money in my bank account to avoid any potential overdrafts. Rate are low but 1% is still 1%.
I autopay everything I can/ but pushed from my checking TO them not pulled by each company.
With Credit cards my default payment is $500 or so above my usual so even if I totally forget to edit the amount according to my statement, the CC company will be paid and probably enough.
I use Quicken to predict cashflow for the checking and keep a buffer amount based on my confidence in predicting the bills.
I do bills once a month which just means to adjust the amount of the autopay transaction and then move money to/from savings as required based on the prediction that Quicken provides.
My wife is the accountant in the family and takes care of all bill payments. She refuses to use any auto type payment system and pays right at the due date. She uses Bill Pay so everything is paid online. She uses a simple system of writing down the due date for every bill on a old fashioned day calendar book. She looks at it every day to make note of what bills are coming due and to make any transfers to the chequing account to make sure their are funds to cover. She might have missed one payment in the last 6 years of doing this with kids. But I really hate anything auto that comes out from bank account unless it’s a recurring amount such as a mortgage payment.
Never autopay anything. How can you track finances if you let everyone and their agent take money out of the account? What a nightmare to resolve bills and payments, especially across different bank accounts. Ever try and get your money BACK? It’s one thing to auto bill to a credit card; it’s entirely different legal rules about allowing other people to enter your bank accounts and take your money. I use bill pay, which helps keep central records. But I won’t let any company, or any of their employees, into my bank accounts.
I only autopay the stuff that charge you to use a credit card. If I can use a credit card for free, I have a better way to pay the bill whether its keep the change, meeting reward checking debits, or the new credit card of the month….
I honestly don’t know how auto pay would save time, unless you just want to completely ignore your bills. 😉
I agree with the comments to never auto-pay anything from a bank account.
I actually set all my bills to pay a month or two ahead of time – but then just enter them in bill pay to pay, to pay on the “due date,” or at least some future point in time. I used to just pay bills when I received them (in the old days). But I love this method from a cash flow standpoint (especially when interest is higher and can earn interest a little longer, knowing it’s already been taken care of and will be paid on time). Between that and using Quicken, how the heck could one forget to pay a bill? But it’s not a time consuming thing by any means.
We just refinanced our mortgage and declined auto pay. The notary told me, “Typical accountant.” LOL. I like to decide when I pay my bills, though generally the money is always there. But I do like the flexibility to plow money in the market instead, or use the money for something else. Some days I pay bills on due date. Other times I pre-pay many months (o.e. for credit card rewards).
I do everything except utilities, because the water utility company recently has had bad press about implementation about their online bill pay (they have lost and duplicated payments, shut off water, etc.). Also I have the bill pay set up way in advance of when it is due. Like for the credit card I pay as soon as it comes in. That way I have lots of time to check that all is ok. Maybe it’s not necessary when I was childless, but now I have like only half a brain, what with the sleeplessness etc. so I give myself lots of “insurance” to pay on time.
I had one experience with Autopay where a credit card company had an erroneous charge on my card and then of course paid itself for it. It took me two months to get the money back. This was at the beginning of online banking and I wasn’t quite as attentive then but to this day, I’d prefer to do it myself
Jonathan – based on your posts over the past few years, i have a very hard time believing that even with three infants you would ever overlook paying a bill on time. 🙂
Congratulations on your inpending fatherhood…it’s a lifechanger.
I autopay the minimum due on each of my credit cards every month, so that I never get hit with any late pay fees. I use my bank’s bill pay service to schedule the recurring payments. When I get the bill, (I prefer paper) I edit the payment that will be made that month in my bill pay. This way, the bills don’t stack up unreviewed.
Absolutely not! Giving a company access to withdraw money via ACH. It is way too risky, and I just don’t believe that most companies really put their customer first. If there is any issue then you, the customer, are at risk and have the burden of work and proof to get your money back.
I made that mistake once, and got burned. It cost me way too much time and effort just to correct the mistake.
What I will do is schedule out a set of payment automatically and have my bank send payments each month, etc.
Hell yeah. The only place I don’t – credit cards. That’s because I often will pay early.
I use Bill pay using bank account but not auto pay. I like to send the money from central place instead of giving my credit card or bank account info to every vendor. In the past, I had issues with not updating the credit card info on the vendor site after it expired so I decided to handle all bill pay from the central place instead of scattered all over.
I use autopay for all of my credit cards and student loans. It’s such a big time saver. I laugh at my fiance who spends an hour or two per week doing bills. I’ve never had a problem in the years of doing it. Use an account aggregator like Yodlee or mint to occasionally keep track of the spending. Give it a shot. The companies aren’t as evil as you think.
Only use auto-pay on things which have no variation from bill to bill. Quite a few times I’ve seen the wrong amounts billed to me.
I only auto-pay my cell phone bill; I have them pull it from my credit card. I signed up for the auto-pay after Citi added a free Cell Phone Protection plan to my Citi Forward card. Citi will replace my phone if damaged or stolen if the phone bill is paid from my card every month. Sure beats paying T-Mobile an insurance premium for this service.
I push everything else from my bank account. Since I’m on a level payment plan with my utilities, and the bills don’t change from month to month, I just log into my Ally account early in the month and set everything to pay on a Friday (payday) toward the end of the month. Ally makes it easy (much easier than some of the other banks I’ve used in the past), because it just gives me ONE screen with all the info I need to pay ALL my bills (I see due dates, amounts due, and last paid date/amount), so paying all my bills at once is a breeze. If I need to change anything later, it’s also super easy to make changes up until the day before the payment is set to come out of my account.
I’m reluctant to have different vendors “pull” from my bank account, because then it’s a big hassle if I ever want to switch banks or even just to close my account. I would have to contact every single one of them and wait a billing cycle or two for the switch. I used to work at a bank, and we often had to deal with this situation: a client has fraudulent activity on her checking account, we have to close her account and open a new checking account with a new number to prevent further unauthorized transactions. Of course, she has to switch her direct deposit, but then if she also has a bunch of vendors trying to pull bill payments from her old checking account number, it’s a hassle for her to get everything switched and it’ll be a couple of months before everything is straightened out. It can be a real nightmare.
I would much rather automate things as much as I can on the “pull” side.
Oops, correction, I meant, I would much rather automate things as much as I can on the “PUSH” side.
All my bills (utilities, cell phone, etc.) are charged to my credit card, which I manually pay off monthly
I use AutoPay whenever possible.
I have a combination of push and pull payments. All of my bills where I do not need to review the statements (utilities, cable, cellphone, garbage, mortgage, insurance, etc.) are on auto-pay. These are the same (or similar) every month, and I get an email when they are paid. If the amount is ever wrong, I can investigate.
The bills where I *do* need to review the statements (only credit cards right now), I pay online after reviewing the statements. My best advice here is to call up all of your credit card issuers and have them change your cycle end date to the first of the month. That way, you can review all of your credit card statements at the same time on the 1st full weekend of the month and schedule payments for all of them on the due date.
I hesitate to put the credit cards on auto-pay because if I did, I know I would not look at the statements regularly (the late fee and interest charge is enough of a motivator to check in).
I agree with the push/pull bit, however I don’t mind setting up autopay whenever I can charge the amount to a credit card. That way if there is some egregious error, I have a grace period to sort it out and the cash hasn’t actually disappeared from my account should I need it in the meantime. My goal would be for all my bills to automatically post to my credit card, and then the first of the month I would just have to pay the mortgage and the credit card bill.
I use Quicken so I know what goes in and what goes out, and I’m not a fan of autopay on everything. I need to have some control over our finances. 🙂
I autopay:
– Mortgage
– Auto Insurance
– Cell and home phone (to CC)
– Electric bill
I manually pay my credit card bills
Using auto pay, may cost you or a family member or friend their job in the future.
Companies are saving millions and not passing it on. In fact in Florida they are laying people off because they don’t need people to run the shrinking non auto paying of bills. Think before acting, that seems to be a horrific trend in America, be led around, and don’t do any thinking! Just an opinion!
I’ve always kept a manual “bill book” to keep track of who, the amount & due date to pay them. On line & auto pay are great, but I still prefer to receive a bill in the mail which sort of defeats the push for “paperless” and possible ID theft from the mail box. However, taking longer trips in our retirement years, makes auto pay my first choice. What has occurred is an earlier withdrawal – like 3 days- than listed; and if not for over draft protection, would have resulted in a fee.