The Downside of Automatic Payments

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Many people, including me, will advise those who want to simplify their finances to automate payments. I personally automate everything except for my debt payments because I like to control how much I pay off from one month to the next. However, while simplified, automating everything has a serious downside -- complacency.

Automatic Payments Can Cost You!

When everything is automated, it’s easy to miss extra charges. For example, if you automate all payments, you won’t know if your Internet or cell phone bill is hiked up for some reason, which is known to happen pretty regularly. While an extra charge here and there probably won’t bankrupt you, they can seriously add up.

Another situation that allows you to be complacent is continuing to pay for subscription-type products and services you don’t really use. If you aren’t seeing these charges, you’re much less likely to cancel them. Therefore, they will keep being processed, month after month.

So What Should You Do?

If you want to keep things simple, but also want to make sure you aren’t paying more than you have to, automate all of your bills to your credit card. Each month, have your issuer email you a copy of your statement. Look it over to make sure you aren’t paying more for services than you agreed to and evaluate your subscriptions -- magazines, media, subscription boxes, etc. -- to make sure you aren’t paying for things you don’t value and/or use regularly.

Of course, you should only do this if you are disciplined enough to pay your credit card balance in full each month. Never charge anything to your credit card that you don’t have to cash to pay off -- it will likely cost you much more than those overlooked charges ever would!

While useful for simplifying finances, automatic payments have a dark side as well. Automate bills mindfully and don’t allow complacency to cost you more money.

About Erin El Issa

Erin is the founder of Red Debted Stepchild, a blog about her journey to getting out of debt while still enjoying life in Portland, OR with her husband. She enjoys reading, eating, traveling, and crunching numbers on her numerous spreadsheets. Sometimes she remembers to tweet at @reddebted.

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