The Disadvantages of Automatic Bill Payments

Although technology is often designed to improve our lives in some way, reducing the amount of time and hassle required for certain tasks, there are often drawbacks to making the switch to new technological products and mediums. The hope is that the benefits outweigh any potential disadvantages. Before you upgrade, it’s best to weigh the pros and cons.

When it comes to automatic bill payments, the advantages are obvious. Having payments withdrawn from your account automatically each month is undeniably convenient when compared to writing and mailing checks. You will not only save time, you’ll also save money on stamps and checks. Some companies even offer discounts or other rewards for customers that go paperless and automate payments. So what are the potential drawbacks of automatic bill payments?

For one thing, you better have money in your account. When you have your bills laid out each month and you pay them manually, you can see exactly how much money is in your account and balance your ledger as each bill is paid, ensuring that you never overdraw. If you don’t have enough money in your checking account to pay a bill, you simply transfer it from savings or wait to pay the bill until your next deposit clears.

When you sign up for automatic withdrawals to pay bills each month, it’s all too easy to lose track of what’s in your account and end up with accidental overdrafts. The good news is that you can combat the potential problem by setting up overdraft protection services (if your bank offers them) so that when you’re overdrawn, money is automatically taken from your savings account to cover the balance, eliminating overdraft fees.

Another drawback is that you can really only use automatic bill payment for bills that are the same amount every month. This means you’re still on the hook to manually pay several bills, which could get confusing. You might end up accidentally missing some payments (because you forgot they weren’t automated) or double paying others (paying both automatically and manually) as a result. If you know how to budget appropriately, you’ll develop a routine that makes this unlikely, but when you’re first making the switch to automating some bill payments, you could suffer snafus.

In addition, it’s easy to lose track of payments that are automated. When you know the money is being withdrawn each month, you might not take the time to check that bills are being paid properly. As a result you might not notice errors like missed payments, double withdrawals, and so on, eliciting penalties from billing agents or your bank in the process.

Overall, automating your bill payments is bound to make your life easier. In some cases it could even save you money or lower your bills. However, you need to be aware of the fact that issues can occur when you stop paying attention to your finances. So even if you elect to automate the payment of some bills, keep an eye on your online checking account to make sure payments go off without a hitch every month.