I try to avoid using autopay for debit cards. It may overdraft if you don't have enough of money in your checking account (if you signed up for overdraft), it's better to have payment deducted from a credit card. Then you can just pay off the balance. Credit cards are more secure than debit cards.
Be aware of any convenience fees you'll incur by paying your bills with credit cards. It's best to use credit only for products and services that won't charge a fee, and using cash, debit or bank transfer for the rest. And, of course, use a credit card only if you know you can pay off the balance each month.
Set it up as online bill pay through either your bank or credit card. Do not use automated debit transactions OR open and use a new checking account (separate from your primary checking account) for automatic payments. Set up alerts in advance of your bill due dates to make sure you have money to cover the bills.
The biggest benefit of credit card autopayment is that it can help you avoid late payments, which can cause you to get hit with both a hefty late fee and a higher penalty interest rate. Another plus is that paying automatically saves you time and effort.
Disadvantages of automatic bill payments include the difficulty in canceling them, the need to keep adequate funds in your checking account, and the potential of incurring a returned payment or late fee.
Using autopay can be helpful for people who struggle with making on-time payments. But you'll need to keep a close watch on your bank account to make sure you're covered when your payment date rolls around so you aren't hit with any fees. Read: Best Rewards Credit Cards.
Utilities and Other Variable Expenses
Therefore, it's generally safer not to set utility bills on autopilot. “Bills that fluctuate aren't good fits for autopay, such as your electric or water bill,” said Bethany Hickey, banking and lending expert at Finder.
Automatic payments could help your credit score, but only if you time the payment to happen before the credit card's statement due date and around the same time you know there will be enough money into your bank account. Making even one late payment could ultimately hurt your credit score.
Credit cards often offer better fraud protection
With a credit card, you're typically responsible for up to $50 of unauthorized transactions or $0 if you report the loss before the credit card is used. You could be liable for much more for unauthorized transactions on your debit card.
Depending on the type of bill and the merchant, you may be able to use a credit card to pay bills. Mortgages, rent and car loans typically can't be paid with a credit card. If you pay some bills, like utility bills, with a credit card, you may need to pay a convenience fee.
Can You Pay a Monthly Car Payment with a Credit Card? Like we said, the simple answer is yes, it's possible to use a credit card for your monthly car payment, but not really advisable.
Privacy may also be a consideration when paying bills with a checking account vs. debit card. Paper checks include the bank account and routing number along the bottom, creating an opportunity for potential fraud. Debit cards do not display this sensitive information, offering additional protection.
Generally speaking, paying your monthly bills by credit card can be a good idea as long as you're able to adhere to two rules. Always pay your statement balance in full and on time each month. Avoid putting bills on a credit card because you can't afford to pay them with cash.
Autopay arrangements are convenient and can lower the risk of late fees, but companies also push autopay because it discourages customers from switching to another service—what the industry calls “stickiness.”
Cards are still the most-used payment method, with American Express, Mastercard, Visa as large global card schemes.
Online bill pay services, usually offered by banks, allow you to schedule payments directly from your account. They share similar security measures with ACH payments, including encryption and fraud monitoring. However, they can sometimes incur fees.
You have a more real-time picture of your money
One of the best benefits of autopaying your bills with your debit card is that you have a more accurate, real-time picture of your financial standing.
Cons of Automatic Payments
Your biller could accidentally withdraw the wrong amount or double-charge you. It could even fail to withdraw the money at all.
Call and write your bank or credit union
Tell your bank that you have “revoked authorization” for the company to take automatic payments from your account. You can use this sample letter . Some banks and credit unions may offer you an online form.
For this reason, experts suggest using autopay for every one of your credit card bills. As long as you know you have the expected money in your checking account each month (to prevent any overdraft fees), autopay is one of the easiest ways to streamline your finances and sleep better at night.
It's generally recommended that you have two to three credit card accounts at a time, in addition to other types of credit. Remember that your total available credit and your debt to credit ratio can impact your credit scores. If you have more than three credit cards, it may be hard to keep track of monthly payments.
Is autopay safe? Autopay services are safe. However, since enrolling in automatic payments involves providing your bank or credit card account information, make sure the company is one you know and trust.