Wednesday, July 31, 2013

Why You Should Not Put Your Bills on Autopay

Companies are constantly pressuring us to stop receiving mailed bills and to stop mailing our payments. They tout the convenience of bank or credit card autopay arrangements. Of course they do, since it is very convenient for these companies to not have the expense of mailing bills and to get your payments as quickly as possible. But autopay is not convenient for me, and here's why:

1. Sometimes, I lose a credit card. It happened to me last year. Because I have no automatic bill paying arrangements on that account, it was a simple matter to call the company and get a replacement card and number. I didn't have to remember what bills might be on autopay, and I didn't and don't run the risk that a request for payment will be denied. If you have five or ten autopays on a credit card, imagine the fuss and bother that a new number could create.

2. Sometimes a credit card company has a major data leak, and sends all its cardholders new cards with new numbers. Surprise. The same problem: it's up to you to notify every one of your autopays of the changed account number or else risk damaging your credit by a refused payment.

3. Sometimes a creditor screws up and double bills me. If the company does not have access to my bank account or credit card, all it can do is send me a second bill. At that point I can call and tell them they've made a mistake. If the company has access to my bank or credit card, it can take my money twice, and then I have to go to a lot more trouble to get my money back. The potential is always there with an autopay arrangement. It's wise to take the measure of a company before considering allowing autopay. I have an account currently with an especially inept company and no way would I ever allow that company access to my money via autopay.

4. Sometimes I decide to cancel a service. If I do so as of a certain date, but the autopay is for a different date, someone at the company has to put in an order to cancel the autopay. An entire billing cycle might go by before the cancellation is sustained. Why put up with that?

5. Sometimes a company decides it wants my money really, really fast. If I allow it to have an autopay arrangement, the company will charge me as early in the billing cycle as possible. That may be convenient for the company, but why should I pay a bill early? It might not be convenient for me for the funds to leave my bank account so quickly. Most people live paycheck to paycheck. We don't want to pay our bills on someone else's schedule.

6. Sometimes I might have a dispute with a company, and wish to withhold payment. That's not going to happen with autopay, is it? Not without effort on my part in addition to whatever effort the dispute itself takes up.  

Autopay arrangements have some advantages, such as when you live in a place where your mail routinely gets stolen, or you can't buy postage stamps, or the mail is never picked up. I am not sure you should live in such a place. Except in rare instances, the U.S. Postal Service works just fine to deliver your bills to you and your payments to your creditors.

If you are concerned that you have a relationship with an untrustworthy company that pretends your mailed check was delayed, and thus unfairly and illegally charges you interest on your purchases, find a better company immediately. Or you can always make an online payment without creating an autopay situation. It only takes a few days to set up online payments. You choose the amount and the date you pay. You are not obligated to continue to make your payments online. You can make some payments by mail and others online, thus remaining fully in charge of your financial life.

If you see autopay as an easy way to deal with regular bills such as health coverage, car loans, or insurance, then at least keep an easily accessible list of exactly what bills are paid via autopay, the day of the month the withdrawal occurs, and the contact information. Otherwise, you could find yourself in a pickle. When I lost that credit card, I was 800 miles from home and I wasn't going to be home for several more days. It was very convenient not to worry about messed up autopays.

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