If you are like most Americans, you will likely be courted by the likes of your utility companies to save a stamp and sign up for credit card autopay, by which you consent to allow the company to bill your credit card each month instead of sending you a bill. As a general rule, they also offer you e-statements, thereby eliminating the cost of a stamp on their end of the transaction as well. But is credit card autopay a good thing? Sure, it sounds convenient and cost effective, but is really in your best interest? Listed below are some of the benefits and dangers to this popular new way to pay your bills.
Credit card autopay is ideal for people who are busy or travel a lot. Instead of having to remember to pay their phone bill, electric bill or cable, they can sign up for credit card autopay which automatically bills the utility service on set day every month. This gives many a peace of mind that their bills will be paid on time and that their credit score will not suffer due to a late payment. If your insurance agency allows for credit card autopay, you won’t have to worry about a lapse in coverage, provided, of course, your assigned credit card is valid and in good standing.
In addition, allowing your utilities to be billed means less bills you actually do need to sit down and pay each month. By allowing credit card autopay, you will save on the cost of postage. A few stamps might not sound like a lot, but as postage rates increase, the savings over the long haul are sure to mount.
Finally, one of the best perks for credit card autopay is that as things are charged to your card, you can earn rewards. Discover Card offers a cash back bonus on purchases and often offers an increased percentage back on certain services, which changes every few months. GM offers a GM credit card that allows you to earn rebate money toward your next GM car, and allows you to carry that amount for 7 years. Numerous cards offer airline miles as well. The key is to choose a reward program that suits you and your spending habits in the most beneficial manner to you.
While the above benefits of credit card autopay sound fabulous, credit card autopay does have its dangers. Here are some common dangers to be aware of if you are interested in signing up for this service.
A serious danger to credit card autopay is that you are giving your credit card information out to a lot more people, thus increasing the chance that your personal information can be stolen. While it is true that identity theft can occur just as easily if you mailed a check and the check was intercepted, the fact remains that every few months it hits the national news that such and such a company had a leak and that customers may be affected. Make sure that your card has fraud protection and never give anyone access to your checking account. While your debit card often acts like a Visa or MasterCard, it should not be given out unnecessarily when you can give someone else a card where at least you can dispute the charges instead of having your bank account emptied.
Another danger to credit card autopay that not many people consider is that consumers are lulled into complacence and tend to lose interest in their monthly bills. This is a pitfall to be avoided. While credit card autopay makes paying your bills a breeze, it should not excuse you from the your financial duty to read over your statements. Does your cell phone contract allow for roll over minutes? Often on the statements there will be a detailed listing of how many roll over minutes you have. Failing to pay attention to this magic number can cause you the unnecessary pain of a rather large phone bill the next month. Trust me on this, I speak from personal experience! Always review your bills even if they are just going to be paid by your credit card. This keeps you abreast of any billing errors or increases in costs. A jump in your electric or gas bill should signal you to turn down your thermostat. Turning a blind eye to bills after signing up for credit card autopay is not recommended.
A final danger to credit card autopay is that consumers can also be lulled into overspending. This happens because you pay your credit card bill generally once a month, whereas if you had been paying bills normally, you would likely be paying bills several times a month instead. If you are an impulsive spender, consider setting up a savings account and having your bank auto transfer a set amount into your savings in the amount of the bills that you will be paying via credit card autopay. This will allow you to have the money on hand to pay your credit card bill when it comes due, and prevent overspending since the funds are leaving your check book like they normally would otherwise.
So there you have it! All in all, credit card autopay is generally an excellent way to manage bills, get more bang for your buck via your credit card perks, and save on postage and time spent paying bills. By avoiding the dangers listed above, you can enjoy the benefits of credit card autopay to their fullest.