A cautionary tale about carelessness, a little laziness, and overpaying
I got complacent with my internet bill. While on hold with a representative, I logged into my account and idly reviewed my bill payment history while trying to figure out why my WiFi was dropping. Turns out, I had been overpaying around $30 every month for over a year, which is around $360. We resolved the issue, but it would have been nice not to have been overpaying in the first place.
This unfortunate situation (partially my fault, admittedly) only proves my long-held belief that while autopayments are convenient, they’re not the best for everyone or every bill.
Why autopay can be a hassle
Despite its strengths, autopay can have some hefty downsides:
- Autopay can lead to complacency, such as not reviewing statements as frequently
- Overdrafts could happen if the bill is linked to a checking account
- Some bills fluctuate, which could lead to unexpectedly large pulls
- You may miss renewal price increases (subscriptions, insurance, etc.)
- Not a good fit for those with varying paychecks or sporadic pay
Bills that may not be a good fit for autopay
Some types of payment in particular are poorly-suited for autopay, as they carry higher levels of risk and are more prone to fluctuations:
- Credit cards: Monthly minimums can vary each month, since your minimum payment is a percentage of your owed balance. It’s also best to manually review your credit card statements to make sure you’re staying under budget and aren’t accumulating debt passively.
- Utilities: Expenses like electricity or water bills can vary month-to-month, so a high-usage month could mean overdraft or declined payments if you’re not careful.
- Rarely-used expenses: For example, a gym membership. If you don’t go to the gym very often, but have a membership on autopay, you may forget about the bill and drain your cash each month.
- Large expenses: For some, autopaying rent or mortgage makes sense, but for those with large monthly payments, it can be risky.
When autopay really makes sense
Autopayments can be very convenient and make paying bills easier, especially when you have a lot to juggle. Autopayments can:
- Ensure “can’t miss” payments get paid (great if you’re forgetful)
- Provide discounts on your bill
- Avoid late fees or credit score harm
- Decrease the mental load of remembering to pay every bill.
Bills that make sense for autopay
Some bills are much more appropriate for autopay, potentially making your life much easier:
- Small bills: Expenses, such as subscriptions under $10 per month, aren’t very risky for autopayments or overdraft issues due to their low amounts
- Essential bills: Think things like health insurance, since autopay will help ensure you don’t have a lapse in coverage
- Fixed amount bills: Expenses like auto loan payments or phone bills generally have fixed payments, so they’re predictable and won’t catch you off guard.
- Discount offers: Some providers offer discounts for autopay, like internet providers or insurance premiums.
Bottom line
Autopay is convenient and can reduce your mental load. But if you don’t monitor it regularly, or you don’t have an account that monitors recurring charges, you could miss price hikes, get overcharged without knowing, or risk overdraft issues if you have a larger bill than normal.
Some autopayments are no biggie, but for large bills or ones that fluctuate, you may want to pay manually.
And above all, don’t be like me — review your bank statements carefully and know what’s on autopay and what isn’t.
