6 Bills You Shouldn’t Put on AutoPay
Putting your bills on AutoPay is a simple and seamless way to budget each month. But beware: There are a few bills and balances that don't make sense to streamline.
Paying your bills online has many benefits like avoiding late fees, reducing paper bills, and adding security, but what about putting your bills in the queue using AutoPay?
Regardless of the type of bill being paid, Dana Marineau, Credit Karma’s former VP of Communications and Brand, recommends using automatic payments to pay your monthly bills only if you’re confident you can afford to pay in full. “Otherwise, you may build up a balance that will charge you interest—and that could undermine your efforts to stay on top of your bills,” Marineau explains. “If you aren’t confident you can pay in full, avoid AutoPay.”
In particular, she says you might want to avoid paying the following bills on AutoPay.
Annual subscriptions or auto premiums
You shouldn’t have infrequent bills on AutoPay, like an annual subscription or semiannual vehicle insurance premium, because you’re likely to forget about them. If one of those bills hits your account when your balance is low, you may end up overdrawing your bank account and getting hit with a fee. Or you may be getting charged for it without even realizing it if you don’t check your statements diligently. Plus, it’s important to pay attention to how many subscriptions services you’re using; having an excessive amount is one of the spending habits personal finance experts hate the most.
Utility and cable bills
Don’t use automatic payments for bills where the total fluctuates each time: think utility bills and cable bills that could end up being a different total each month. You should also avoid paying certain bills with cash—including utility bills.
Credit card bills
Credit card bills can present challenges when it comes to automatic bill pay because you’ll want to cover at least the minimum amount due, and you may or may not have enough money to pay more every month. Smart credit card management is a must for healthy personal finance, so make sure you know the purchases you definitely should and definitely should not use a credit card for.
Lastly, any temporary charges, like memberships or subscriptions, should not be on AutoPay to ensure you’re only paying for the time you used them. If you sign up for a trial of service but forget you’re paying since it’s on AutoPay, you may be shocked when you finally look at your credit card bill later on to find you’ve been paying for a service you weren’t using.
In order to pay each bill on time and ensure you aren’t overspending, it’s sometimes helpful to set aside a regular, recurring time to pay your bills. Schedule a block of time on your calendar, and try to make it part of your routine. Marineau recommends that you set up alerts every time a payment is taken from your bank account so you know what is being spent, whether it’s done manually or automatically.
These tips demonstrate the importance of knowing how your money is being spent. Making and keeping a budget is a useful way to do that. Here are money experts’ best tips for making a budget.
- Dana Marineau, former VP of Communications and Brand at Credit Karma