Recently I was speaking at a workshop and one of the participants asked me whether she should put her bills on auto pay or if she should manually pay them. The issue that she was having was that she would forget that her bills were on auto pay, would spend money that she didn’t have, and then ended up with multiple overdraft fees on her checking account.  However, when she took the auto pay off she would forget to pay her bills and ended up paying late fees. It’s definitely a challenge because without the proper vigilance or system a lot of money can be wasted on fees.

If you are trying to decide which option is the best for you then consider these things below.

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Auto pay:

I absolutely love auto pay because it takes away the guesswork with paying your bills. I love that I don’t have to take the time to go to a website to pay the bill, because it is done automatically. All I do is check to make sure that the payment was taken from my bank account when I do my regular review of my bank transactions. The one thing that I do have to remember is to make sure that the money is there. If the money is not there and the payment fails, then I may be subject to late fees and failed payment fees from the merchant on top of the overdraft fees that you bank will charges.

If you use auto pay then you need to have a really good system in place to limit overspending so you ensure that the money is there for those bills paid via auto pay.  You also need to remember to check the bill to ensure that it is accurate, because it’s easy to forget to review the bill.  To ensure that you have the money in your account to cover the bills, cluster these payments around your pay periods to ensure that the bills are paid before you have an opportunity to spend the money. If you can create this type of system and commit to a regular review of your balance then auto payment is good for you.

Benefits: Convenience, avoids forgetfulness and associated late fees

Risks: Overdrawn accounts, incorrect amounts withdrawn

Manual Bill Pay:

With manual bill pay, it gives you a bit more control over when the money is taken from the account, because you go in and initiate payment. The risk of this is that if you forget to pay your bill in full then you will be subject to late fees. The benefit is that if you check your account before you pay your bill then you will be able to avoid bank overdraft fees. It also forces you to double check the statement to ensure accuracy before the bills are paid.

All of my reoccurring bills are not on auto pay. I actually have my cable and electric bills on manual pay. The reason why is that my cable company will periodically change pricing without a lot of advance notice and I got tired of having an unpredictable cable bill. My electric bill varies by season and I wanted to ensure that I was able to pay the bill based on upcoming one-time expenses and the other things going on in my life during the months when the bill was higher than normal. Therefore, I wanted to have more control over the bills that fluctuated.  I wanted to ability to decide when I would pay them during the month and I also wanted the opportunity to scrutinize the charges a little more and to call the company if necessary to negotiate a lower cost. If you elect this option then you should set up a reminder so that you know when those bills are due to avoid late payments.

Benefits: More control over when bills are paid, more ability to negotiate bills if they are higher than expected, minimized overdraft fees

Risks: late fees

Hopefully this article has equipped you with the information that you need to make an informed decision about whether to place your bills on auto pay and if you do which bills should be automated.  Be sure to leave a comment to let me know how you will use these tips!

Aisha Taylor is a #1 Amazon Best Selling Author of the book “5+5 FNPhenomenal Ways to Save $100 This Week Without Killing Your Lifestyle”, the Founder of FNPhenomenal (Frugal –n- Phenomenal), and creator of The Live Phenomenal Program. The Live Phenomenal Program is a program designed to give you the tools that you need to totally transform your finances, and stop living from paycheck-to-paycheck. It’s time for you to be Financially Phenomenal! Book your complimentary 20-minute financial clarity session with Aisha here.

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