The increasing popularity of online banking is allowing more people to take advantage of automatic bill payment technology. This technology provides a way for the account holder to schedule repeating payments for their monthly expenses. There are many benefits to using this type of banking technology, but there can be a few drawbacks as well. Here are some things to think about when considering automatic bill payments.
Easy To Implement
Banks have made it very easy for their customers to implement automatic bill payments from their accounts. In most cases, the account holder only needs to enter the information for each account that they want paid once into the program on the bank’s website and the bank will make a payment to that account every month. Submitting the information only takes a few minutes and the person will not need to view the information again unless any changes need to be made.
Flexible Scheduling
The account holder can choose when and how often an automatic bill payment is made to a particular company. This allows the account holder to plan around their pay dates and when other sources of income are due to arrive. The person can schedule their payments to occur on the actual due date of the bill or schedule the payments to occur the day after their paycheck has been deposited into their account. Flexible scheduling ensures that each bill is paid before the due date and reduces the chances that the bank account will be overdrafted.
Payment Problems
There is a chance of payment problems when using automatic bill payment technology. If there is not enough money in the bank account to cover the amount of the automatic bill payment, then the bank may refuse to make the payment or they may make the payments and charge you an overdraft fee for your negative account balance. These overdraft fees can add up quickly at an average rate of around $35 per occurrence. Any disruption in the average amount of money in the bank account, such as an inaccurate paycheck amount or an unexpectedly large withdrawal, can cause a payment to be made while there is not enough money in the account.
Considering the advantages and disadvantages of automatic bill payment before signing up for the service will help you make an informed decision about whether having your bills paid automatically by your bank is the correct course of action for your current financial situation.