We could all benefit from a more straightforward, more efficient method of managing expenses and saving money. Putting your bills on autopay ensures that you will never forget a payment or due date, reducing the likelihood of incurring late fees and having your credit report tarnished.
However, even though automatic payments can save you time and help you organize your personal finances, they are not always the best option for every expense.
Autopay is ideal for payments that don’t fluctuate significantly from month to month, such as your mortgage and car loan. Because you know exactly what to expect from these bills every month, it’s much easier to plan and budget for automatic draft payments. This is not the case with monthly expenses that change from month to month.
Cellular Phone Billing
If you have an unlimited cellphone plan and your bill never changes, setting up autopay for your bills is a time-saving strategy for managing your finances. It is also possible to set up automatic payments for a cellphone plan that does not include unlimited data.
The problem, on the other hand, is that the amount you owe can vary from month to month, depending on how much data you use.
Furthermore, if you fail to read your cellphone statement for several months during which you owe more than usual, the additional funds taken from your bank account may result in an overdraft and bank fees.
Some cellphone plans do not have the same billing date each month, which is another disadvantage. While some people have a set date — for example, the 15th — others follow a monthly cycle that varies depending on the number of days in the month in question.
However, this does not ensure that payments are made on the same day each month, and you may be caught off guard — and out of funds— if a payment is received when you were not expecting it.
Because autopay is a hands-off approach to paying bills, you’ll be less likely to inspect your cellphone bill after you’ve set up automatic payments for your bills. As a result, you may fail to detect billing errors and end up paying more than you should have.
Bill Regarding Utilities
Because your utility bills fluctuate every month unless you are on a budget plan with your utility company, which allows you to pay a set amount every month, your water, gas, and electric bills will also fluctuate every month. As a result, it is generally recommended that you do not set your utility bills on autopilot.
Every month, you must log in to your account in order to make one-time payments to your creditors. In this situation, the likelihood of you reviewing your statements before making a payment increases. Furthermore, when you review your statements on a regular basis, it becomes easier to spot unusual price increases.
As an example, an increase in your water bill may indicate the presence of a water leak in your home. It’s possible that a leak will go undetected for months if you set up auto-draft for this bill and never look at your statements again. This will cause extensive damage to your home and your wallet.
Membership in a fitness center
A gym membership can assist you in getting into shape and losing excess weight. However, you may suffer even greater losses.
In order to ensure that you attend the gym on a consistent basis, setting up your monthly membership fee on autopay is a good idea. However, despite your best efforts, you may find that your actual time spent at the gym is significantly less than anticipated — to the point where it is no longer economically feasible to pay for a membership.
Some bills become out of sight and out of mind when they are paid automatically. Consequently, there is a risk of losing track of the money that is being withdrawn from your account.
Alternatively, you may become so accustomed to paying certain expenses that you become stuck in a rut of paying for a membership that you never use or vice versa.
If you pay monthly, on the other hand, you’re more likely to evaluate your gym usage on a regular basis and cancel your membership if you’re not using the facility regularly.
Service via cable and satellite.
Cable and satellite bills can be unpredictable, especially if you watch a lot of on-demand movies and television shows. It’s possible that you’ll never notice how much you’re spending on extra services if your cable bill is automated and funds are automatically deducted from your bank account.
In addition, cable and satellite companies appear to raise their rates on a yearly basis, and they include fees for new services, such as regional sports networks, that you don’t actually use.
Making a one-time payment online or sending a check in the mail gives you the opportunity to review your bill for price increases and to take advantage of any additional options you may not have previously considered.
Examining your cable or satellite bill will also alert you to the fact that all of the promotional offers you signed up for have come to an end. It may also encourage you to contact the company and request a renegotiation of your current services.
Streaming Video Services.
It is convenient to use streaming services such as Netflix and Hulu because they allow you to watch whatever you want, whenever you want. However, you should think twice before signing up for any of these services.
If you have cable, you may find that some of the shows and movies available through streaming services are also available on-demand through your cable provider.
If you become accustomed to having streaming fees deducted from your bank account or charged to your credit card on a monthly basis, you may continue to pay these fees month after month without considering whether you actually require the services.
By subscribing to a streaming service but not using it to its full potential, you are essentially flushing money down the toilet.
Streaming of music
Music streaming services such as Spotify and Apple Music allow you to listen to virtually any song by any artist at any time. The disadvantage is that you must first provide a credit card or bank account number in order to gain access to the songs. The monthly fee for the music service is automatically charged to your credit card.
If you’re getting your money’s worth from your streaming music service, it’s a fun luxury to have. Unless you cancel your subscription, the company will continue to draft your account until you cancel your usage and streamless music (or stop streaming altogether). If you forget to cancel a service, you will be charged for a service that you will not use.
Boxes of cosmetics
In addition, several cosmetics companies offer beauty box subscriptions, where subscribers receive a box of products each month to try out in their own homes.
This is a smart marketing strategy for cosmetic companies, and it’s a convenient way for you to try out different beauty brands without having to pay the full retail price for each product.
Because these subscriptions are relatively inexpensive — with prices typically starting as low as $10 per month — it may appear to be a minor monthly expense. However, this is not the case. However, the cost of a beauty box subscription accumulates over the course of a year.
If you set up automatic payments for this subscription, it’s possible that you’ll forget to break down the cost and calculate the value of the subscription. Despite the fact that you may spend more than $100 per year on your boxes, you may only use a small percentage of the items contained within them.
Subscription to a newspaper
If you prefer to read the news rather than watch it, subscribing to a print or digital edition of a newspaper puts the most recent headlines at your fingertips whenever you want them.
Subscribers to some newspapers have the option of setting up automatic payments. If you read your subscription, this isn’t a bad deal. However, life can become hectic at any time and for no apparent reason.
And if you get distracted and pile the newspapers in a corner without reading them, you’ll end up wasting money by paying for a subscription that you’re not going to read.
If, on the other hand, you schedule one-time payments every month, you’re more likely to cancel your subscription once you no longer benefit from the service, according to research.
Subscriptions on an annual basis
Make sure you don’t set up automatic payments for subscriptions or services that renew once a year if you have them.
No matter how well organized you are, how good your memory is, and how good you are at writing everything down on the calendar, annual expenses can still catch you off guard.
The fact that you don’t think about your debts very often may cause you to forget about the next payment deadline, especially if you don’t receive notice of the upcoming deadline.
When you choose to have your annual subscription auto-renew, you are giving the company or retailer permission to charge your credit card or withdraw funds from your bank account on the next payment due date without your permission.
Without adequate planning, the company may draft your bank account when you do not have sufficient funds in your account, incurring an overdraft fee and charging you for the service.