Friday, November 4, 2011

Auto Pay

Paying bills isn’t any fun, so why spend more time on it than you have to? By setting up automatic payments for your bills you can save yourself time and avoid late payment fees.

Many companies have the option of setting up automatic payments. Some don’t, but that’s okay, because in many cases you can set up an automatic payment through your bank. It only makes sense to pay through your bank if the amount due is the same every month, though. If the amount varies, you have to go in and change it every month anyway.

Keep a master list of any and all automatic payments you set up. Keep track of the amounts due, when they’re paid, and what account the money comes out of. This master list will come in handy if you ever lose your credit card or switch checking accounts. I worked as a collections agent for a while, so I can tell you that many past due accounts were caused by expired credit cards. The master list allows you to update your payment method easily without any bills falling through the cracks.

Avoid fees. Some companies will charge you a “convenience fee” or something similar if you use a credit card for your auto pay. Usually using a checking account instead is enough to avoid the fee. Just read the fine print and ask questions to make sure there are no hidden charges.

Keep a little extra in your checking account. Since payments are made without you checking your account balance, you could get into a sticky overdraft situation. I try to stay 1 month ahead in my checking account. This reduces the feeling of living paycheck to paycheck, and I don’t have to worry about my electric bill causing me to overdraft.

So, for this week’s ten minute fix. Choose a couple of bills you pay every month and do some research to see if you can switch them to auto pay. Setting it up won’t take much longer than paying the bill itself, and when next month comes along, you can just file the bill away without worrying about it!

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