I read a lot about personal finance. Much of this is at the message boards over at Bogleheads or SavingAdvice. One debate I’m tired of seeing is the one about AutoPay so I’m here to take a stand. You should AutoPay in full anything that allows it.
There, I said it. I feel better. But, this is the internet so of course I now must defend my position. Why should you AutoPay?
- You’re never late with a payment. If the payment is set to automatically come out of your checking account, guess what? It does. This means you guarantee yourself no finance charges or late fees. I can almost guarantee you that I’ll get a comment from someone with some very specific situation where they were autopaying but for some reason it didn’t work and they got hit for a fee or interest because of it. What you’re not going to see is a comment from the hundreds of thousands of other people who have been paying this way for years with no problem. Although I would welcome that!
- You open up space in your brain. You don’t have to remember that your mortgage is due by the 3rd of the month so you need to initiate the online transfer or that the gas card is due on the 17th, but the 17th is a Sunday so you need to get it there by the 15th and you live in NY but the processing center is in Omaha so you need to mail it on the 11th just to be sure it gets there. And, do I have stamps? Yeah, that’s a waste of my brain.
- You save money on stamps and checks (assuming you’re one of those truly old school people that mails your payment). Do those people still exist? Should I admit this reminds of Ke$ha? Probably not.
- It serves a governor on spending. Hear me out here. If you’re one of those people that doesn’t have a lot of float in your checking account, you’re going to pay more attention to your spending habits if you know that your bill is set to autopay every month. Sure, you could turn it off, but that’s another hassle. So, you’ll be more mindful, and that’s good.
- No special calendar or spreadsheets. How many times do I hear from people who don’t autopay say “I have a special calendar that has all my bills listed on it” of “I designed an Excel spreadsheet for that”? The following is an actual quote from what I believe is a real person:
“I have a system that I created. I got a pocket folder and on Word created a chart of all my bills going down and the months of the year going across. I put that on the front and then laminated the whole thing. So as I pay them, I can check them off down the list and I can easily see that the whole column for April has been paid. I used to write the amount in, instead of a check mark. Also, i took a file folder and cut it in half. I stick them inside the pocket folder (so it is like 2 file folders inside, with the tabs sticking out the top). On the tabs I have “Pay on the 1st” and “Pay on the 15th.” When I receive a bill in the mail, I tear off the payment stub and stick it in the appropriate file so when I sit down to pay bills, I just grab that file and write the check.”
If this is really how you want to spend your free time, then go ahead. I’ll be playing LEGOs with my kid.
Next let’s debunk some of the reasons people give for not Autopaying:
- I like to review my bills. Yeah, and…. This has nothing to do with autopaying. You can review your account online anytime you want. Even if you get a paper bill, you have plenty of time to review all of the charges prior to payment going through. That’s not an excuse not to autopay, that’s just laziness.
- I don’t trust them to pull the money out. Um, yeah. Look I don’t trust the banks or cable companies or phone companies or fitness clubs to do much of anything right, but believe me when you’re willing to autopay, they extract that money every time just like they say they will. And, when they don’t, they fix it. Twice I’ve had a Bank of America payment fall on a Sunday, and they pulled the money on the following Monday which of course results in a finance charge. I can see it all online. And, sure enough a couple of days later they reverse themselves. Again I would rather have these rare occurrences happen where I have to pay particular attention for a couple of days rather than worry about payments every month.
- I only autopay fixed amount payments like a mortgage. Inevitably the follow up statement to this is something along the lines of I like to pay more attention to things like credit card bills. *SIGH* There is NOTHING of course that prevents you from already doing this online. Set it to autopay and simply review your charges.
What do I do? I autopay everything I can possibly autopay. That includes 10+ credit cards, my mortgage, my cable, my cell, my landline, and my gym. And, with all my extra time I write posts like this!
Alright everybody, what do you think? Did I convince you?