Of all the conveniences the 21st century brings us, none is quite as revolutionary as the automatically paid bill. It keeps a debt out of our mind that we'd really rather not think about. It pays what needs to be paid, saving us from stress of the decision-making process. And it pays the bill exactly when the bill is due -- no more setting up / managing reminders. Out of sight, out of mind!
We here at Debt Decimator have a different perspective: AutoPay is the work of the devil. Here's why:
1. AutoPay leads to overdrafts on tight budgets
While it may seem convenient to simply have bills paid for you, what happens when you have a tight month? A little extra expenditure on groceries, or a night out with your friends, and oops...you're just a few dollars shy in the old account.
Much like the honey-badger, AutoPay doesn't care about that...AutoPay just does what it wants.
Whether you have the funds in your account or not, AutoPay performs its one and only task -- keeps on autopayin' -- right into an overdrafted account. In some (worst-case) instances, the automatic payment might be rejected and the bank might charge you additional fees. Now you have two problems.
2. AutoPay lacks what's best for you
When you set up a bill for AutoPay, your options are limited. Typically, you're given the following options
- pay the full balance
- pay the full balance (as of your last statement)
- make a minimum payment
- nothing else
If it is a card that has thousands of dollars on it, does paying the full balance at the end of the month make sense? Not if you'd like to eat/pay off any other bills!
What if this card is your hot card? It's doubtful that your lender even knows what that is...so you can't expect this to be an option.
That leaves you with simply paying the minimum, forever -- the best solution for the lender (since they make the most off you through interest). But what's the best solution for you? Answer: there isn't one here, not in typical AutoPay configurations.
3. AutoPay reduces your financial agency
If there is one thing we can't stress enough, it's that you must be in full control of your finances at all times. As the story of your life continues to ebb and flow, you must be able to bend with it, adjusting your bill payment strategy on-the-fly.
Not only is it not possible to do this when you have bills set up to AutoPay, as time goes on, you think about your finances less, care about budgeting less, and eventually, come to believe it simply isn't important enough to give it your attention.
When you do this, the credit card companies and banks reap the benefits, while you struggle to get by.
Do It The Right Way™
We implore you to take charge of your financial situation by killing AutoPay, and doing it yourself:
- Log on to your accounts and disable automatic payments.
- Use Google Calendar to set up a reminder for each due date.
- When your reminders pop, return to your accounts, and make the payment manually...right down to typing the actual amount you're paying into payment field itself.
Only by overseeing and approving each individual payment can you truly take hold of your financial situation. It's just like Mom said: "If you want something done right...do it yourself."