If you are responsible for paying bills, you have probably heard of Autopay. With Autopay you can set automatic bank recordings or credit card payments to cover your bills.
The payment method provides the consumer for two reasons: it simplifies the payments and can save you money. When you place an account on Autopay, you do not have to remember to submit a manual payment, which eliminates the probability of a missed expiry date and associated credit score. In addition, some companies offer a slight interest rate reduction or invoice discount when you draw up automatic payments.
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However, Autopay is not perfect and can cause major problems with money management. Keep reading to see the stories of two consumers who have experienced Autopay problems, what they have learned from them and what advice they have for others. That way you can avoid the same fate.
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Dr. Darla Bishop, author of “How to Bant offers everything” and founder of Finansis, said she used Autopay for most of her recurring bills because it held her when her life became hectic.
“I didn't want to run the risk of forgetting a payment and hurting my credit score,” she said. “Autopay gave me peace of mind and helped me to stay consistent, even during difficult times, as when I lost a family member and was too derived to keep the payments manually.”
Recently the Autopay system of its bank did not recognize a manual payment that she made earlier in the month and has still processed the regularly planned automatic payment. As a result, her cash flow was temporarily influenced, which led to unnecessary frustration. If she could go back in time, she would have paused Autopay the month that she submitted a manual payment.
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Although Bishop is planning to continue to use Autopay because of convenience, she has adjusted her strategy.
“I have now set Autopay for the minimum on credit cards to prevent late costs, but make manual payments for extra amounts. That way I avoid too much paid and I still get the benefits of Autopay, “said Bishop.
Her most important collection meal from the experience was to pay attention to how payments are applied.
“It is important to know whether extra payments go to the main balance or are applied to future payments. In many cases you must specifically determine how those payments should be granted, “she added.
Miranda Marquit, MBA, is an advocate of financial well -being who often also uses Autopay.
“Autopay can be a great way to stay up to date with bills, especially if you travel a lot. So I have it for my utility accounts, insurance, student loans and other recurring bills, “she said.
Over the years she has had two Autopay-related problems. The first happened when she and her husband at the time both made purchases of the same checking account on the day that a large credit card automatic payment would also come from that account. The bank processed all transactions at the same time, which resulted in a negative account balance. Marquit ended with a cash flow problem and two red stand prices for a total of $ 70.
The next issue happened when her apartment rental was renewed. The real estate management company did not take into account its discount for renting two years, so its automatic payments were higher than they should have been. She did not notice the overload for two months and when she brought it up, the business management company fought her against repaying the Tejon and adjusting the Autopay amount.
Just like Bishop, Marquit Autopay will continue to use because it generally makes her life easier. However, she keeps a close eye on it. “I have a money date with myself twice a month to assess transactions and bills and to ensure that the autopays [sic] are accurate, “said Marquit.
“I wish I had originally taken the time to look at my monthly cash flow and understand how money moves through my personal economy before he sets up [automatic payments] Upstairs, “Marquit said, in reference to some negative experiences. Fortunately, you can often choose the date on which an automatic payment is processed to accommodate your cash flow.
However, Marquit did not do that before and had all her automatic payments cluster together. “There have been a few times where all autopays came out at the same time, just before the income reached my account and I ended up with returned payments (and their reimbursements) or redstand (and their reimbursements),” she said.
In addition to the wisdom from her story, Bishop offered the following two best practices for Autopays:
Test Autopay with one or two bills to see how it works before it is set for all your monthly obligations.
Register for your bank warnings to stay on upcoming payments and account balance.
“Autopay has been a savior in need for me, but it is not perfect. Stay proactive by checking your payments and to understand the system of your bank can help you prevent hiccups such as too multiply payments. It is a tool, not a replacement for regular account management, “Bishop added.
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This article originally appeared on Gobankingrates.com: I went bankrupt because of Autopay: what I wanted me to do differently
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