If you use credit card, you can set up automatic payment. This means that you arrange for the money you owe your creditor each month to be taken directly from your Bank account. If you set up automatic payments, you don’t have to manually pay your card when payment is due – this process is for you.
There are great benefits to setting up automatic payments from your cards. But there are also undeniable disadvantages. You’ll want to consider the pros and cons of auto-paying your cards before deciding to go ahead with taking advantage of this feature.
Advantages of automatic payment of your credit cards
Here are some of the main benefits of setting up automatic payments for your credit cards.
- You can make sure you pay off your balance and avoid interest: You have choices when you set up autopay. You can choose to make only the minimum payment or pay your entire balance. If you choose to pay off your balance, you can ensure that you never pay interest on your credit card. This can save you a lot of money in the long run since the cards charge interest at high rates.
- You do not risk forgetting a payment: Setting up automatic payments ensures that nothing slips through the cracks. Missing a payment can result in late fees and damage your credit, but you don’t have to worry about that with autopay enabled.
- You can build your credit score: When you make on-time payments on your credit card each month, those payments will be added to your credit file. Payment history is the most important factor that determines the credit score you earn, so paying your card automatically can have a big impact in helping you earn a good score.
Disadvantages of automatic payment of your cards
And here are some of the biggest drawbacks:
- You can’t carefully track what you spend: If money is simply transferred from your bank account to pay your credit card each month, you may not know exactly how much you are spending. You’ll likely pay less attention to your card balance if you don’t have to pay it manually, and you’re less likely to check your statement to see where you’re spending and look for opportunities to make discounts.
- You can overdraw your bank account: If you sign up to automatically pay your card and you don’t have enough money in the bank to cover it, it’s possible that your account will be overdrawn. This leads to high fees, which can cost you financially.
Is automatic card payment right for you?
Ultimately, you’ll need to weigh the pros and cons of setting up autopay. If you’re worried about an overdraft or think that paying your card automatically will lead to less responsible spending, then you might not want to go ahead. But if you’re sure you’ve got the money and you’ll still stick to your budget, setting up autopay is a great way to ensure you never face the consequences of paying late just because something escaped you.
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