happy people talking about autopay

Pros and Cons of Using Automatic Monthly Payments

Autopay is maybe the greatest invention since paperless billing. I don’t know about you, but the only kind of snail mail I like is my annual birthday card from Grandma that comes with a piece of paper featuring a dead president inside. I’m certainly not a fan of anything that comes in the mail with a due date, unless my sister-in-law has some news. I digress.

Sure, autopay is excellent. It’s saved me from missing the monthly payment on my outrageous cable and internet bill, as I’m one of few holdouts not to cut the cord. But autopay has its pitfalls too. You certainly don’t want to end up in deeper debt while trying to pay off debt, right? Here’s a look at the pros and cons of setting up automatic monthly payments, as well as how to optimize autopay.

Advantages of autopay

Believe it or not, one of the biggest pros of setting up autopay is that it could help increase your credit score. Your payment history makes up 35% of your FICO score and is “moderately influential” in your VantageScore—the two most popular credit scoring systems that lenders and creditors use to evaluate your creditworthiness. Autopay can help ensure that you never miss a bill due date and maintain your on-time, in-full payment streak.

If your method of automatic payment is a credit card, you could boost your rewards points, miles, or cash-back bonus. And you don’t have to worry about whether you have enough funds in your bank account. Just make sure you’re paying off your credit card on time too.

Autopay can also be a big-time saver because you don’t have to find time to sit down and pay your bills. You don’t have to worry about keeping track of multiple due dates, and if you’re on vacation, you don’t have to interrupt your trip to make a payment (even if it’s usually as simple as using an app on your phone).


Disadvantages of autopay

Nobody says the ol’ “out of sight, out of mind” cliché quite like Kelly Clarkson. But she probably doesn’t have to worry too much about how she’s paying her utility bills either. Is that not what Since U Been Gone is about?

Not having to remember to pay your bills is one of the advantages of autopay (and being a popstar, I’d imagine), but in a sense, it’s also one of the disadvantages. If you forget that you’ve set autopay on certain bills, you might be caught by surprise when you check your credit card statement or find your bank account has been depleted. Not to mention, if you’re not reviewing your bill, you could be getting overcharged and not even know it.

In the event you’re paying those bills with a credit card, you could be doing yourself a disservice. If your credit card bill is much higher than you’re expecting, any money you saved by avoiding late fees on your bills could catch up with you if you roll over your credit card balance and have to pay interest.

You also might not realize how close you are to your credit limit. Ideally, you want to stay below the 30% credit utilization mark, which is the amount you owe compared to your credit limit. The lower your credit utilization ratio, the better for your credit score. If autopay is going to push your credit utilization ratio above the 30% mark, or worse yet, over your credit limit, it’s not a good option for you.

How to make the most of autopay

There are a few pro tips to keep in mind when trying to get the best bang for your buck out of autopay services:


  • Ensure that the company you’re setting up autopay with doesn’t charge a fee. Some companies offer autopay discounts, which is another win.
  • If using a credit card and you have multiple, make sure you choose the one with the best rewards benefit.
  • Designate funds for your autopay bills in your budget like you would any other monthly expense.
  • If your creditor or lender doesn’t give you a heads-up that your payment withdrawal date is upcoming, make sure you set up alerts so you can reallocate funds as needed.
  • Don’t just set it and forget it—double check your statements for errors and/or fraudulent transactions.

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