Note: We receive a commission for purchases made through the links on this site. Our sponsors, however, do not influence our editorial content in any way.
Many financial coaches will tell you that one way to get ahead financially is to set up automatic payments. But if you have never used this system before, you may still be on the fence about it.
Here are few tips for using your bank’s services for the autopay feature, plus some pitfalls to watch out for.
Let’s start with 3 top benefits of autopay:
Autopay should cut your time in half. That’s time spent mulling over whether you really should pay that overdue bill now, or if you should book a holiday plane ticket instead of putting the extra cash away in your savings account.
One of the best tools you can use autopay for is to reach the goals you have set aside—whether it’s paying yourself, saving for a rainy day, or setting aside for taxes. Setting money aside for taxes is a good financial goal considering the recent tax changes and how they may affect your returns.
Autopay makes that paper trail a thing of the past. You can save the environment while saving on time.
This is especially useful if you travel a lot, or work from different places. Having everything in one financial “base” helps you keep track. No more chasing those documents left in some unknown paper pile.
If you struggle with penalty fees, and extra charges because of your forgetfulness, then autopay can work in your favor.
Some lenders and even the best credit card companies also have an option for interest rate discounts for clients on an autopay scheme. This could be something useful for you to look into.
That said, it’s important to be aware of a few things before setting your account up for automated payments.
When you automate payments, you must be sure there are enough funds in your bank every month. Without a regular income, you can’t guarantee that a poorly-timed automatic payment will result in overdrawn fees or penalties.
Every time you automate payments, record them somewhere, whether it is automated PayPal accounts or bank savings. Sometimes, little things here and there add up to a bigger collective cost.
Make sure you know exactly how much you are spending overall. Don’t be afraid to cancel subscriptions or bills that are no longer necessary to pay.
Autopay can be a solution if you are managing your money well. If you are having a hard time financially, or are in-between jobs, it could become stressful.
Think of the autopay feature as a tool for making life easier. But remember, it is not the big solution to your financial problems. If you need help getting out from under a mountain of debt, consider a financial counselor or a service such as debt settlement. The best debt settlement companies will guide you through the process until you get back on your feet and on your way to a healthier financial life.