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I have a friend who owns the Tesla Model Y with the Full Self-Driving (FSD) package. He loves the autopilot in his car, and I agree.

The feature reduces workload, increases situational awareness, helps mitigate risks, and makes the driving experience safer.

But it should be recognized for what it is – another means for YOU to control the vehicle.

The same goes for automatic payments. The automated bill payment system is just a tool that you can use to make it easier to pay your bills. It has limitations; ultimately, you must keep a watchful eye on your spending.

So, is it worth it? Often yes, but sometimes no. To make the most of it, you need to implement it for the right bills and have good financial habits.

Before giving it a shot, read ahead and carefully consider the pros and cons.

Pros of Automatic Bill Payments

It's Convenient

Juggling multiple recurring payments isn't something that people accept happily. You do it because you have to.

But with automatic bill payments, the process can get a lot easier. Instead of visiting several different websites or shuffling mailed invoices amidst the sea of emails, you can automate the process, keeping your bills organized in one place.

It Can Improve Your Credit Score

An average American pays a double-digit number of bills every month. So, it's not unusual to miss a few occasionally. However, if the missed payments get frequent, it can hurt your credit score.

So, if you have too many bills on your plate, automating a few can help you lower the negative marks on your credit history.

Alastair Hazell, a financial expert, recommended one of his clients to try automatic bill pay. The client automated his mortgage, car payment, and credit card bills which resulted in saving money on late fees, and his credit score improved.

Avoid late fees

Nothing stings more than to pay a $40 late fee for forgetting to pay your credit card bill on time. So, to avoid such a penalty, set up automated payments.

The automatic online bill pay system can remove this unpleasant scenario once and for all. Your payments will always be on time.

However, when automating your credit card bills, it's essential to monitor your account to watch for fraud or accidental overspending.


"Some banks and other financial institutions offer incentives when you sign up for automatic payments. These might include free checking, no-fee overdrafts, higher interest rates on savings, or even cash-back rewards," said Trinity Owen, Chief Financial Officer at The Pay at Home Parent and a Certified Financial Education Instructor℠.

Cons of Automatic Payments

Overdraft Fees

Suppose you go for automatic bill payments, and the amount you have to pay changes to a higher value causing your account to get overdrawn. In that case, you might get charged an overdraft fee of $35 or more.

The Company Might Make A Costly Mistake

What if your phone company or gym withdraws your monthly payment twice? Or your internet provider puts an extra zero on your balance?

Companies usually don't make such mistakes as their reputation is on the line; however, it can happen. Redressing such mistakes can cost you time and effort.

Higher Spending than Needed

The set-it-forget attitude that comes with automatic payments can cost you more for stuff that you don't even use.

Think about it: you sign up for a subscription, you set the automatic bill payment, but after a few months, you end up not using the service as much as you used to. But you keep paying the bill as you have become emotionally disconnected from the transaction. It's now automatic.

Which side of the pros and cons’ line you fall on depends on whether you use the automatic tool when it makes sense, take manual control when the situation demands, and tweak the system when necessary.

You can't just flip the switch and leave the rest to the automatic system.

How to Make Automatic Payments Work for You?

Choose the Right Bills to Automate

There are some situations when automatic payments work; somewhere, it doesn't. So, you must use it at the right time to make the best use.

Here are some bills you should not put on autopay -


Utility bills can fluctuate from one month to the next, depending on your usage. So, avoiding automatic payments is safer unless you're on a planned budget through your utility company.

When the road bends haphazardly, and you have little foresight as to when the next turn comes, it's best to take the wheel in your hand.


If you're an avid gym goer, you may get your automatic payments' worth. However, if you're infrequent in your visits and your actual time spent at the gym could be far less than anticipated, it's best to avoid automatic payment.

Why pay for the time in the gym when you're relaxing at home?

Cable and Satellite

Cable and satellite bills fluctuate. So, if your cable bill is paid automatically and money is taken out of your bank account, you might not notice how much you spend on extra services you may not even be using.

Video and Music Streaming

Streaming services like Netflix, Hulu, Spotify, and Apple Music offer thousands of content and charge accordingly. But do you take full advantage of the service? If you don't and you've automated the payments, you're just losing money month after month.

In short, it's better not to automate variable expenses. So, what type of bills can you automate safely - you guessed right - it's your fixed expenses.

Here are some examples -

Mortgage Payments

If your mortgage is a fixed amount that doesn't fluctuate from one month to the next, it makes sense to automate this expense.

Rent Payments

As rent is another fixed expense, you can set up automatic payments for the same to avoid incurring late fees.

Student Loan payments

Getting out of college and stepping into a life full of surprises can be overwhelming. It can get to the point that you even forget to make your student loan payment.

Autopay can help. And the best part: If you set up autopay for a student loan, you might qualify for an interest rate reduction of as much as 0.25%.

Health Insurance and Life Insurance

Automatic insurance premium payments are a great way to ensure you never forget to pay your bills and lose your coverage.

Make A Budget

Just because you automate your payments doesn't mean you can throw your hands in the air and let your bank take care of your finances. It's your personal finance, and you have to take care of it.

To do that, you'll need a budget accounting for all your expenses, including the automatic bill payments you set up. Also include the due date for each of the automated bills.

By doing this, you'll know your automated expenses and monitor timely if the designated checking account has enough funds to make the payments.

In short, maintaining a budget will allow you to supervise if your financial wheel is turning as you intend to or if any issues demand your attention.

Don't Use a Credit Card if You Can't Make Payments in Full

As you know, credit cards charge exorbitant interest rates, and when you use them to pay bills, it can push you into debt that may prove challenging to get out of.

"Many people use their credit card to set up automatic bill payments," says Matthew Ramirez, a serial entrepreneur, investor, and Forbes 30 under 30 alumni. "By doing so, they can enjoy perks like rewards and cash back."

However, he said you could rack up interest if you're not careful. So, to avoid interest charges, you must pay off your credit card balance in full every month.

Related Article -

Credit Debt Consolidation - How to Pay Off High-Interest Credit Debt.

How Does Automatic Bill Payment Work?

There are three ways to set up automatic bill payments -

Through Your Bank or Credit Union

With your bank or credit union, you'd have to log in to your online banking or mobile banking app.

Tell them which biller to pay, how much to pay, when, and from which checking account to take the money.

After setting up, your institution will send the payment to the vendor through an electronic payment system.

Directly With The Biller

If you choose to pay the bill directly to the biller, you will need to send them with your bank account information, so the money can be taken automatically on the bill's due date.

Using Your Credit Card

You will need to give the biller your credit card information to automate your payments with a credit card.

The biller will then charge your credit card each month for the amount you owe, and you'll need to send a payment to your credit card company to put toward your balance.

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