Once upon a time, people had to scratch out a check and stick it in the mail to pay bills every month. It’s quite a hassle and time-consuming process that people have to deal with to settle their accounts. Fortunately, those days are long gone—thanks to the internet, paying utilities, loans, credit cards, and other bills are now simpler, quicker, and easier with the use of automatic bill payments.
However, even with that convenience, it’s still possible to forget a payment due date or completely miss a payment. That’s where automated bill payment comes in to save the day.
But is automatic bill payment the ideal bill-paying method for you? Is it perfect, or does it have some notable flaws that need to be addressed? This article will answer all of these questions as we share the pros and cons of automatic bill payment.
What are Automatic Bill Payments?
An automatic bill payment is a money transfer that’s scheduled in advance to be sent from your bank account to another account to pay a bill. The payer sets up the automatic payment, which typically happens on a monthly basis.
The payer can set up the automatic bill payment through their bank or creditor’s website. The payer will need to provide their banking information and the amount and frequency of payment.
After the automatic bill payment is set up, the payer doesn’t have to worry about making manual payments each month. Instead, the money will be transferred from their account to the other account on the specified date.
How Does Automatic Bill Payment Work?
Automatic bill payment works by the payer giving their permission to the payee to withdraw money from their account on a regular basis. The amount withdrawn is typically the same each time.
For example, if you have a monthly gym membership that costs $50, you can set up automatic bill payments so that $50 is withdrawn from your account on the same day each month.
The automatic payment will keep happening until you cancel it or change the payment details. It’s important to note that you can change the details of automatic bill payments at any time.
What Are the Pros and Cons of Automatic Bill Payments?
Now that you’re familiar with automatic bill payment, it’s time to explore the pros and cons of this payment method.
Pros:
It’s convenient
Convenience is the name of the game for automatic bill payment. Instead of visiting several different websites or fielding email invoices to make manual payments, automatic bill payment does all the work for you.
You can schedule automatic bill payments in advance, so you don’t have to worry about forgetting to make a payment. This feature is useful if you have a busy lifestyle, tend to forget important deadlines, or are too busy running your business.
It can help you avoid late fees
If you’re someone who often forgets to make manual payments on time, automatic bill payment can help you avoid late fees. As long as you have the money in your account to cover the automatic payment, your bill will be paid on time each month.
That means no more scrambling to make a manual payment at the last minute or dealing with the consequences of late fees. Instead, automatic bill payments will help you stay on top of your bills and avoid costly late fees.
You can track your spending more effectively.
When you have automatic bill payments set up, you can more easily track your spending. That’s because it leaves a digital record of each transaction in your bank account or credit card statement.
This paper trail can be helpful when it comes to budgeting and tracking your monthly expenses. You can quickly and easily see how much you’re spending on bills each month, which can help you make more informed decisions about your spending.
It can improve your credit score.
Your credit score will depend solely on your payment history. If you have a history of making late payments, your credit score will suffer. But if you make automatic bill payments, you can rest assured that your bill will be paid on time each month. This consistency will positively impact your credit score over time, which is great if you’re planning to apply for a loan or another form of credit in the future.
Cons:
There’s a risk of overdrafts.
One downside of automatic bill payments is the risk of overdrafts if you don’t have enough money in your account to cover the automatic payment. For example, let’s say you have a monthly gym membership that costs $50. If you set up and your account balance is only $40, your bank will likely charge you an overdraft fee.
Overdraft fees can quickly add up, so it’s important to make sure you have enough money in your account to cover all of your automatic bill payments.
You might lose track of your spending.
Another potential downside of automatic bill payments is that you might lose track of your spending. When you have automatic bill payments set up, it’s easy to forget about the money that’s being withdrawn from your account each month.
This can lead to overspending and put a strain on your finances. To avoid this, make sure to keep a close eye on your bank account balance and make a budget to track your monthly expenses.
Use ReliaBills to Setup Automatic Bill Payments
If you’re running a business and you’d like to bill your clients automatically, you should try ReliaBills and its recurring billing services. Setting up recurring billing will not only save you time, but will also ensure that your clients pay on time.
ReliaBills is an invoicing and payment processing platform that offers various tools and features for creating awesome invoices and setting up recurring billing for your business. With ReliaBills, you can:
- Choose from a wide range of templates for your invoices
- Automatically send invoices to your clients on a schedule of your choosing
- Accept online payments via credit card or bank transfer
- Keep track of your spending with our easy-to-use accounting tools
- Bill and collect payment automatically from your clients.
- And much more!
With ReliaBills, you are in full control of your billing process. You can customize your invoices, automatic payment schedules, and payment methods to suit your business needs. Our platform is 100% secure and compliant with the latest industry standards.
Try ReliaBills today and see how easy it is to get started with automatic bill payments for your business! Visit our website now at www.reliabills.com to learn more.
Wrapping Up
Automatic bill payments are a great payment option. It provides a ton of convenience and can help you stay on top of your monthly expenses. However, there are also some potential downsides to consider before signing up. So make sure you weigh in on the positives and the negatives to decide if automatic bill payments are right for you.
