Automate bill payment? Pros/Cons?

[Chuckanut]

+1

However, that's only using a cash-back credit card. I avoid allowing any business to direct debit my checking account after a bad experience many years ago.

The above is very wise.

Most of my auto-pays are now done with a CC. The few payments that come from my checking account are me telling Bill Pay to send NNN dollars each month. I never let any organization reach into my account and tell the bank "Send $NNN of Chuck's money to us. He won't mind".

 

[cathy63]

It looks like I am in the very small minority on this. Perhaps I should reconsider and automate. In doing this, how do you set this up? Do you have it taken from a savings account or checking? Do you keep a hand written check log? How do you, or do you, run a bank balance? Do you just take the bank's word? I'm trying to wrap my head around the daily operational process.

There are a lot of different ways to manage this. What I do is setup the payments at each payee's website. I have most bills charged to a credit card, but there are a few (electric, water, estimated taxes) that will only pull from my checking account.

I keep track of everything in Quicken. I have Quicken reminders setup for all my payments, so they appear in my registers a few days before the funds will be deducted from my accounts. The ones where the amount is the same every month are set to auto-enter; for the others, I just update the amount on the reminder when I get the bill by email.

I do a Quicken update approximately weekly to download transactions from my financial institutions, match up what I've already entered, and add anything else like interest or dividend payments. Quicken marks the downloaded transactions as 'cleared' and if anything doesn't match what I entered, I can figure out what went wrong then (usually a typo on my part). When I get bank/cc statements, I use Quicken's reconcile feature to change the status of the transactions to 'reconciled'.

 

[armor99]

What are people’s thoughts on automatic payment of bills - like utilities, cell phone, cable, etc?

I like the convenience but maybe I’m missing a key downside? I do watch the bills each month before they’re paid to avoid surprises.

What do you do?

This is a hard NO for me. I never went to be in the situation, where if something goes wrong, I have to chase after my own money.
With the advent of online payment, I can pay all of my bills myself online I’m like 10 min. (Or less). I did ask my bank once if I send and online payment and it does not get there for some reason who is legally at fault. The bank said they were, and would incur all penalties, write letters of apology etc. That works for me..

 

[Cobra9777]

...I never let any organization reach into my account and tell the bank "Send $NNN of Chuck's money to us. He won't mind".

That's fine if you have a choice. DW and I both have heavily-subsidized retiree health insurance from our prior employers. The only option for paying the monthly premium is automatic bank draft. We're certainly not going to refuse health insurance based on concerns about the bank draft.

The way I see it, we trusted them for decades with our bank info for direct deposit of our paychecks. So we trust them now to pull the health insurance payment. Never a problem after 35-40 years.

 

[OldShooter]

There are a lot of different ways to manage this. What I do is setup the payments at each payee's website. ...

I don't want payees getting direct access to my checking account. Almost all of my payments are via Schwab bill pay. They have a list of payees where the payee will send Schwab an electronic bill. Once I have selected a payee and clicked the necessary boxes, Schwab takes care of contacting the payee and setting up the exchange. This takes care of most payees and almost all regular bills. I get an email identifying the payee and the bill amount well before the payment date so I can stop or alter payment if necessary. I don't recall ever having to do this.

Where the payee is not listed, I can manually add the information on the payee and provide my payee account number. Doctor co-pays fall into this category. When a co-pay bill arrives, I just go into the Bill Pay page and enter the amount and the date I want the bill to be paid.

A related category is a regular bill that is not available electronically. For those I simply set up a recurring payment in the correct amount.

 

[Cobra9777]

I don't want payees getting direct access to my checking account...

That's why many of us use a cash-back credit card for bills... plus the cash-back, obviously.

For me, the more interesting question is whether to set up the CCs themselves to automatically pull from the checking account. For many years, I resisted this, and paid them manually using Fidelity's bill-pay service. But then, I missed a CC payment once while traveling. They charged a late fee plus suspended all cash-back rewards for the remainder of the year. Probably hit the credit report as well, though I never check it.

So I started looking into auto-pay for the CCs. I actually started a thread on that subject here. After reading all the responses, I made the change. That was 2.5 years ago and I haven't had a single problem. For me, the convenience is worth it. Plus, the CCs are all major financial institutions, not Dry Creek Valley Electric Coop. So I think the risk is minimal, and manageable if something did go wrong.

 

[ncbill]

Cash-back credit card for as many bills as possible.

The rest I pay electronically via bill pay...pushed, not pulled, from a checking account.

Paper statements still come for credit cards & those bills for which I push payment just in case I drop dead.

 

[brett]

The only thing that we have not automated is our credit card statements. Like others they vary widely.

We have directed as much of our automated payments as possible to our credit card account. It is a very simply process to cancel at any time. Plus, we want the points.

 

[VanWinkle]

I auto-pay everything that I can.
The only CON is that if I die at home, it might be a very long time before anyone notices.

never thought of that one!!

 

[Exchme]

We have a couple things like the water bill that can't be automated, so DW pays a few hundred dollars ahead so we don't forget. With bonds yielding almost nothing, it doesn't seem worth trying to optimize that.

 

[John Galt III]

I use my credit card as little as possible, thinking that the less I use it, the less likely it is to hacked. I was similarly fearful of providing checking acct number, bank routing number, etc to anyone, with the same reasoning. However, it seems that fraud via electronic payments from banks is way less frequent than with credit cards. Therefore I feel fairly safe making push payments electronically these days. Still minimizing my credit card usage, though.

 

[MrsHaloFIRE]

I autopay everything possible. I think at this point we only manually pay annual property taxes bc they charge too mucht o pay online, and the pool guy bc that doesnt exist in his world. Never had fraud or overdraw. Pulled one bill off autopay when there was a weater incident and we were expecting shenanigans at the power company. I still manually pay that bc I still anticipate shenanigans as it shakes out. I have a friend that laborious sits down to review and pay bills I think twice a month and it takes her over a day. SHes above avg intelligence and lives in a normal house and buys normal groceries etc. She is just so untrusting of everything she insists on paper copies of bills (that in my mind are easily lost or misdirected in the mail). THis system works for ehr even thought she complains to me about it 3 days prior and 3 days afterwards. Its her hobby I think. Same person was worried about the Amazon Echo sidewalk setting and she doesnt even own any products with it on there, just the fact that it exists I guess.

 

[Livefree]

We use a cash back credit card for Electric, Internet, Cell Phone, and Streaming bills, that I setup to automatically be charged to the card.


So convenient, and 4 less bills to pay. I did have to log into 2 of these vendors last month to change the credit card expiration date. (the others were notified by the credit card.



But that's only once very four years.

 

[OldShooter]

We have a couple things like the water bill that can't be automated, so DW pays a few hundred dollars ahead so we don't forget. With bonds yielding almost nothing, it doesn't seem worth trying to optimize that.

Our lake home rural coop phone bill can't be automated and it fluctuates a dollar or two from month to month. I have just set up a fixed monthly payment and every year or so I adjust a payment to reflect whatever credit or debit has accumulated. So for all intents it is automated.

 

[Katsmeow]

It depends. Bear in mind that some places require auto pay or give some sort of discount for auto pay. Without considering that this is how I do it:

1. Payments that are fixed and recurring -- Auto Pay these - Mortgage and insurance premiums are the big ones. But I have a few fixed small monthly or periodic subscriptions that I have on autopay. The big thing is that these are things to do not change often. Insurance sometimes changes but I get notice of that.

2. Credit cards -- I have auto pay set up for the minimum payment. I actually always pay the full amount each month (unless it is a zero percent interest thing). I don't want to auto pay the full amount in case there is some sudden fraudulent charge that I don't see.

On the other hand, if I got hit by a bus and was in the hospital I would want the minimum to be covered so I didn't hurt my credit rating. DH would eventually figure it out but this way he has plenty of time.

The autopay on these is almost never actually pulled as I go and pay the full amount before it gets pulled.

3. Utilities -- No autopay. I used to do autopay for some of these but I recently had a large bill that I was able to get adjusted before the due date. If I had auto paid I would have gotten a refund later. Utilities tend to vary more so I don't like just blithely saying to pay it all.

Yes, I know some people say they check the auto pay amount before it goes through. That is OK if you can do it. But, I have had the following happen:

Some providers pull the autopay immediately on the bill being generated. One of my utility providers does this so you can't check it.

Some providers won't let you pull a payment shortly before it is made so that isn't helpful.

If I get hit by the bus I won't see the bill to check it.

 

[Sunset]

....
Has anyone had a mishap occur on auto pay where the billing party accidentally took more than they were supposed to? I had something happen once that makes me hesitate changing over. My employer made a mistake in paycheck auto deposit and then took it back. Didn't make the correct deposit for several work-days. This made some of my scheduled payments overdraw. Old lessons are hard to break.

I avoid this by keeping a spare $1,000 or so in my checking account.
I view the $1,000 as Zero.

Once had a boss who took everyone in the office to explain his bookeeper/bank screwed up and Friday's pay would not show up until Monday.
He was very impressed when I just said "Ok". Unlike many of the other staff who wailed and cried how they would suffer over a 2 day delay.

 

[Sunset]

We have a couple things like the water bill that can't be automated, so DW pays a few hundred dollars ahead so we don't forget. With bonds yielding almost nothing, it doesn't seem worth trying to optimize that.

I do the same for my rental water bill, as the fee for missing the payment is $25, far more than interest on a prepayment of $500.

 

[scrabbler1]

I avoid this by keeping a spare $1,000 or so in my checking account.
I view the $1,000 as Zero.

Once had a boss who took everyone in the office to explain his bookeeper/bank screwed up and Friday's pay would not show up until Monday.
He was very impressed when I just said "Ok". Unlike many of the other staff who wailed and cried how they would suffer over a 2 day delay.

Same here, with both items. My first-tier emergency fund is a cushion I keep in my local bank's checking account. It has varied over the years, but it has been in the $1,500-$2,200 range. It would cover any delay in getting money, such as a paycheck (when I was working) or dividend payment (today in ER). The cushion also takes into account the avoidance of minimum balance fees in the checking account. So, the worst thing that would happen is I'd get hit with a small fee, maybe $10 or $15, hardly devastating.

Your story about the delay in pay is like one which happened to me back in 2001 when my pay got delayed for 2 weeks. This was because I had just switched from working full-time (straight salary) to part-time (hourly pay), so I was now going to paid on a lag basis. My boss apologized for not telling me beforehand that this was going to happen. I smiled and said, "Okay, no problem. Thanks for the explanation." She was surprised at my calm, indifferent reaction.

Getting paid on a lag basis for the next 7 years came in handy when I left the company in late 2008 because I received an extra paycheck for the lagged pay. This was in addition to some untaken PTO hours I didn't know I had from 2007. So, I got 3 checks from my company after I left!

 

[pb4uski]

....Credit cards -- I have auto pay set up for the minimum payment. I actually always pay the full amount each month (unless it is a zero percent interest thing). I don't want to auto pay the full amount in case there is some sudden fraudulent charge that I don't see. ...

I don't worry about this very much. First, the credit card companies are very good in allowing disputes to chearges in my experience. Second, I have a few weeks from when I get my credit card statement until when the payment is pulled to log in and change it to less than the full balance.

 

[audreyh1]

I don't worry about this very much. First, the credit card companies are very good in allowing disputes to chearges in my experience. Second, I have a few weeks from when I get my credit card statement until when the payment is pulled to log in and change it to less than the full balance.

Same here.

I do change it, for example, if I have claimed a cash reward as credit since that is applied to the next payment.

 

[Cobra9777]

...I do change it, for example, if I have claimed a cash reward as credit since that is applied to the next payment.

All 3 of my CCs automatically adjust the payment amount to reflect any credits posted to the account between the statement date and the payment date, including cash-back rewards. This confused me at first because the payment they pulled was always a little less than the balance on the statement.

 

[pb4uski]

+1 I usually get an email a couple days before the autopay telling me the amount that they paln to pull.

 

[audreyh1]

All 3 of my CCs automatically adjust the payment amount to reflect any credits posted to the account between the statement date and the payment date, including cash-back rewards. This confused me at first because the payment they pulled was always a little less than the balance on the statement.

It’s because I use ebills and billpay rather than allowing the CC company to pull the payment. The ebill has already been sent to the bank, and later I redeem a cash reward, I have to make the adjustment. Or I could be lazy and it would work itself out on the next bill.

 

[OldShooter]

All 3 of my CCs automatically adjust the payment amount to reflect any credits posted to the account between the statement date and the payment date, including cash-back rewards. This confused me at first because the payment they pulled was always a little less than the balance on the statement.

I only have one card and it works the same way. I download all the card transactions into Quicken, so I see any credits as they are posted.

I typically have about 18-20 days between the statement coming in the mail and the payment being pulled ACH. By that time the statement comes, I have seen and verified most of the transactions anyway.

 

[sengsational]

^ This is why I only use a CC for autopaying bills, not debiting my checking account. Had a similar issue years ago that took months to resolve and don't want to chance it happening again.

Recently changed health insurance that was set to a Pull autopay from my checking account. They still pulled the payment even though I had canceled the policy. It took 5 weeks for them to send me a check. It also cost me $15 bank fee to ensure they could no longer pull from my credit union checking account. (Stop payment fee.)
Never any other issues.

I'm very reluctant to give anyone ACH access because of this. I had a $70/$700 thing and ended-up closing the account and opening a new one, and order new paper checks. If given a good incentive, I'll give them ACH. My insurance company offered $10 a year or something for ACH and I didn't bite on that, but the student loans offered a lowered interest rate, and that was good enough to bite.

We have a couple things like the water bill that can't be automated, so DW pays a few hundred dollars ahead so we don't forget. With bonds yielding almost nothing, it doesn't seem worth trying to optimize that.

Last multi-month vacation, I just overpaid the bills to last through two billing cycles. Another benefit is that you can more quickly reach the spend amount required for the credit card signup bonus.