How Setting Up Automatic Payments Saves You Money

According to a recent survey, 30 percent of American adults say that they don’t pay all their bills on time. With late payment fees of $25 and up and interest rates soaring, that can get very expensive very quickly.

Automate Your Payments

Enter autopay and bill pay. Both tools allow you to set up automatic payments for your recurring monthly bills. This can save you big money, but you also need to understand the details to make these systems do their best for you. 

Autopay vs. Bill Pay

Autopay

This feature allows you to set up autopayment for recurring bills by having a charge placed on a credit card or automatically debited from your checking or savings account.

Bill Pay

Your credit union or bank provides bill pay and allows you to make payments through an online portal – via your computer, tablet, or phone. You can set up automatic recurring payments there as well.  

How to Get Started With Automatic Payments  

Getting started with automatic payments is easy. There are different types of payments, which means there are slightly different ways to set up autopay. We’ve listed them here:

Fixed Payments

Certain payments have a set amount every billing cycle. Start with bills that are for the same amount every month, like:

• Rent or mortgage
• Subscription services
• Cable or internet
• Cell phone

These make for easy budgeting since you know the exact amount that will come out of your account every month.  

Variable Payments

Next, look at bills with payment amounts that vary from month to month. Variable payments most often include the expenses tied to the amount of usage and may include the following:

• Credit cards
• Utilities (Water, Electric, Gas)
• Technology (internet, mobile phone plan)
• Transportation (Gas, Public Transit Cards)

Be Careful with Variable Payments

Variable payments are more difficult since you have to be sure you have enough in your account to cover the set payment. For this reason, many people only opt for the minimum payments on credit cards. Be careful, this can result in additional interest charges and remaining in debt longer than necessary. It’s better to have the full payment deducted, which means you’ll have to keep a closer eye on your spending.

Don’t Just Set It and Forget It

Auto and bill pay lessen the chance that you will forget to pay a bill, but resist the urge to put it completely out of your mind.

• Make sure you sign into your accounts regularly
• Double-check your charges and the flows of funds
• Verify that things are running smoothly

Set Up Your Transfers

For billers that offer autopay, work through their portal or app to set it up. For those that don’t, like some landlords, establish autopayments through your credit union’s or bank’s portal.