January 22, 2013


Credit: David Castillo Dominici
Do you pay any of your bills electronically? If so, have you set up automatic bill payment, where you give a particular vendor (like your utilities provider) the authority to charge your checking account or credit card whatever amount you owe for a particular month? Perhaps you have set up an automatic distribution from your checking account to pay off your credit card monthly or even automatic distributions from your checking account to make your mortgage payment? Using automatic bill payment has its perks and its drawbacks, but if you are a fan of this common payment feature, you still need to keep an eye on things…

Let’s say there was this guy who had his credit card set up for automatic, end-of-the-month, balance-due payments from his checking account. Let’s say an evil little larcenist from Michigan was somehow able to charge more than $200 for a purchase from Zappos to the guy’s account. How would the guy know about the fraudulent charges if he strictly relied on automatic bill pay and didn’t check his statements closely?

Let’s say there was this guy who had a television provider sign him up for a special, initial monthly price that went away after six months. Rather than the channel selection automatically being reduced to the package the guy originally wanted, the special package was mysteriously automatically retained, and the price promptly soared when the introductory period came to an end. How would the guy know if he strictly relied on automatic bill pay from his credit card to cover his family’s television bills?

Finally, let’s say there was this guy who made a payment online to his water and sewage company, but for whatever reason the payment was not recognized by the company despite their e-mail confirmation. Now in this case, the funds never left the guy’s account, so it wasn’t quite as big of a deal as it could have been, but how would the guy know he had a late fee that he could easily explain away if he strictly relied on automatic bill pay and did not keep an eye on things?

Now I know that automatic bill pay can be great because it is convenient and practically ensures you will pay your bills on time, but you should still be careful. The examples I mentioned above do not happen often, but when they do, you want to catch them. If you don’t believe me, you should, because the examples I used above all happened to “this guy” (yeah, me) in 2012! I caught them and want you to do the same.

Those first bills of 2013 should be about to start trickling in if they haven’t already, and now would be a perfect time for everyone to take a closer look and make sure their “autopilot” bill payments are still working.
  • Be vigilant- If you are going to use automatic bill pay, make sure the services are free or charge very minimal fees, make sure your payments are being made on time with no late charges, and make sure you are paying entire balances due, not just minimum payments due (if possible).
  • Double-check accuracy- If you are going to use automatic bill pay, make sure the services you are paying for are the ones you wanted, and make sure the expenses you are paying for are truly yours.
  • Look for savings- If you are going to use automatic bill pay, make sure you aren’t paying more than you need to. Do you need high definition for all your television boxes? Do you need that 5 GB data plan for your smartphone if you’ve never used more than 2 GB? Do you still need a landline? Do your children realize what taking an hour-long shower means? Take a look and you may surprise yourself. If you find even one way to save more per month, it will be worth your time. Even if you don’t find any new ways to save per month, it will be worth your peace of mind.

Now this post may sound like I’m being a little harsh on automatic bill pay, but keep in mind I sometimes use this payment feature myself. If you have sufficient funds and spending self-control, but just have trouble getting your bills in on time, I might even recommend automatic bill pay to you! I’m not trying to scare you away from using automatic bill payments (and certainly not from the convenience of electronic bill payments), I’m just trying to help you find some monthly savings and protect yourself.

Autopilot can be great, but don’t fall asleep in the cockpit.


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