Should You Use Autopay for Your Credit Card Payments?

1. What Is Autopay?

  • Autopay automatically pays your recurring bills from a linked bank account.
  • Payments are made on the same date every month, ensuring you never miss a due date.
  • You can set the payment amount and date, offering flexibility.

2. Types of Autopay Options You can typically choose from these four options:

  • Minimum Payment: Avoid late fees but accumulate interest.
  • Custom Amount: Pay what you decide, but interest may still apply.
  • Full Statement Balance: Best way to avoid interest.
  • Minimum + Additional: Pay a bit more to reduce your balance faster.

3. How to Set Up Autopay

  • Set up autopay through your credit card issuer’s website, app, or by calling customer service.
  • Payments will be automatically debited from your linked bank account on the selected date.

4. Benefits of Autopay

  • Save Time: No need to manually make payments each month.
  • Always On Time: Avoid late fees and maintain a good credit score.
  • Less Paperwork: Cut down on manual bill payments and reduce errors.
  • Peace of Mind: No more worrying about missing due dates if you’re busy or forgetful.

5. Drawbacks of Autopay

  • Less Scrutiny: You might miss fraudulent charges or errors if you aren’t reviewing your statements.
  • Overpaying: Without checking, you might pay more than you need to.
  • Stopping Payments: Cancelling autopay can require extra steps and might take time to process.
  • Unnoticed Charges: Fraudulent charges could go unnoticed if you’re not reviewing your bills closely.

6. Key Considerations

  • Available Funds: Ensure you have enough in your account to avoid overdraft fees and missed payments.
  • Link to Savings: Consider linking your checking and savings accounts to cover any unexpected shortfalls.
  • Minimum Payment Trap: Be cautious of autopaying only the minimum amount, as it can lead to long-term debt issues.