What Are Automatic Payments And How Can They Benefit You?
3-Minute ReadPUBLISHED: October 28, 2020 | UPDATED: August 29, 2022
Putting your personal finances on autopilot is one of the best things that you can do. Whether you are still getting paper bills and mailing checks, going to your service provider’s location or logging on to their website to pay your bills, there is a better way.
In this article, we’ll take a look at how to set up automatic payments and why it’s usually a good idea.
What Is Automatic Bill Payment?
Automatic bill payment is the term used when your monthly bill gets paid without any intervention on your part. Another term for this is recurring bill payments. Automatic or recurring bill payments can also be used with electronic statements to simplify your life and reduce the amount of bills that you get in the mail.
One scenario where automatic bill pay could be helpful is if you’ve taken out a personal loan to consolidate your debts. Making timely payments can help you get out of debt sooner and keep your credit score in good standing.
What Is Autopay And Is It Safe?
Autopay is just a shortened name for automatic bill payment. Setting up autopay is quite safe – in fact, in most cases it’s safer than having your personal and account information sent through the mail. If you’re including your debit card or credit card information via mail with your payment information, autopay is going to be much more secure through the encryption available with modern web browsers.
What Are Some Autopay Benefits?
Here are some of the top benefits to making automatic bill payments:
- You don’t have to worry about any missed payments – you can have confidence that your bills will be paid on time, without needing any of your intervention.
- It can raise your credit score – your payment history is one of the biggest factors in determining your credit score, so making your payments automatic can help to raise your credit score.
- It’s more convenient – no need to spend mental energy on doing a menial task.
- Many merchants offer a discount if you change your payment method to online bill pay.
- If your merchant allows it, you can make your automatic bill pay with a credit card. Credit card payments can earn you cash back or credit card rewards.
Cons To Setting Up An Automatic Bill Payment
There are a few things that you’ll want to keep in mind when setting up automatic bill pay. First of all, you do still need to be aware of the different monthly bills that you have, and when they are scheduled to be taken out of your checking account or savings account via ACH (automated clearing house).
You will also need to make sure that you log on to your online banking site and have enough money in your accounts when the ACH withdrawal comes out. If not, you risk damaging your credit score and incurring overdraft fees or late fees from your bank.
How To Set Up Automatic Payments
If you’re looking to set up automatic payments, the first thing that you’ll want to do is log on to your service provider’s website. You might also find a direct link to the company’s bill payment options section on your monthly statement. Many different providers allow automatic bill pay, including personal loans, auto loans/car payments, utility bills, student loans, cell phone providers and mortgage holders.
Once you’re on the website, you’ll generally put in your bank account number. You can choose to pay from a checking account or savings account, or in some cases, even with a credit card. Next, select the frequency you wish to make payments. If it’s available, it’s generally a good idea to set the payment to pay the full statement amount on the payment due date.
If your service provider does not offer automatic payments, you still may be able to set up recurring payments through your bank or credit union. If you’re doing an autopay through your bank’s bill pay service, you will want to check whether your bank sends the funds electronically or via check, and how long it takes to deliver the payment. That way you can make sure to schedule your payment several days before the due date to avoid late fees, or a higher interest rate.
Making recurring, automatic payments through your bank’s bill pay service is best if you have a bill that has the same monthly payment each statement. Another good time to use automatic payments is if you’re making extra payments toward the principal of your loan each month to pay off your debt.
Learn more about our automatic payment process here. And to learn more about what you can do with a personal loan, visit our Rocket Loans Learning Center today!
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