Automated payments can be an absolute godsend for any number of reasons. Through the automated withdrawal of funds, companies offer a streamlined, convenient method for avoiding late fees.
However, there are some downfalls to this method. If you don't keep a careful watch over your accounts, you may find yourself facing overdraft fees and penalties. Furthermore, because you aren't manually paying your bills every month, some services can slip under the radar. So, you end up being charged for something you don't really need (or want). If you're trying to identify the pros and cons of using automated payments, keep on reading for our take on the subject.
Pro: Automated Payments are Convenient
In the world of automated payments, convenience is the name of the game. Gone are the days of sitting down at the kitchen table with a stack of bills and your trusty checkbook to make insurance, rent, and cable service payments. By choosing to have your bills paid automatically, you can save yourself a lot of time and trouble.
Pro: Automated Payments Let You Forget About Deadlines
When life gets busy, things get missed. With automated payments, keeping track of deadlines becomes a thing of the past. You can count on each and every one of your bills getting paid in full every billing cycle and on time. No more late fees!
Pro: Automated Payments are Actually Good for the Environment
By switching to automated payments, you're saving countless trees from being turned into paper, which is good for the environment. You're also helping to reduce emissions and your mail carrier's carbon footprint. Fewer deliveries to your home will definitely benefit the environment.
Con: Automated Payments Can Result In Overdrawn Accounts
One of the distinct disadvantages of automated payments is that companies don't check the balance on your designated account before withdrawing funds. As a result, if you don't keep careful tabs of your bank account balances, you can end up with an overdrawn account very quickly.
Con: Automated Payments Continue Indefinitely
When you have to write a physical check for every bill or make manual payments, you can determine what services you actually use and what you can do without. With automatic payments, you may end up paying for services you don't need but don't realize you're paying for. Needless to say, such expenses can accumulate very quickly, and in a matter of months, you may find yourself in a financial bind.
Con: Automated Payments Lull You Into a False Sense of Security
Sometimes, interest rates rise and by extension, monthly payments increase. If you're making manual payments every month, you'll notice when the monthly price of a service has increased. However, if you're on an automatic payment schedule, you can potentially go for months before realizing you're getting charged more. If you do use automatic payments, however, be sure to check the amounts being withdrawn on a regular basis to keep track of potential price increases.
The Bottom Line About Automated Payments
As seen above, there are pros and cons to using automated payments. For some people, they're a perfect bill-paying solution: easy, convenient, and efficient. However, for others, they can turn into an absolute nightmare. If you're living paycheck-to-paycheck, we don't recommend using automated bill payment options.
What's right for you will depend on both your personal situation and unique budget needs. However, if you're still unsure about how automated payments will work for you, let us know. We're more than happy to answer your questions.