Managing your bill payments can be a real pain. If you’re struggling with it, you might want to consider trying something new: automation. Read ahead to find out what this banking feature brings to the table.
It’s easier to keep up with all of your various bills, whether it’s your utility bills or your loan repayments when you set up automated bill payments. For instance, you decided to borrow online through CreditFresh to cover an emergency expense because you didn’t have enough savings available. You used the small online loan to cover your emergency in a short amount of time. Now, you have to follow a straightforward repayment plan.
It might feel intimidating to add this extra payment plan to your stack of bills. After all, you’re juggling a lot. By automating this process, you can rest assured that you’ll stay up to date with the billing cycle and make your loan repayments on time. Soon enough, you can put the emergency and the loan that you borrowed for that emergency behind you.
Fewer Late Penalties
Do you have a bad habit of forgetting about bill due dates? Do you always realize, with a sinking feeling, that you are weeks late on getting back at a bill? Or do you not find out until the next bill comes in with penalties?
Don’t let your forgetfulness saddle you with late fees. Automating your payments means that your providers will get paid on the due date, even if the bill completely slips your mind.
Better Credit Score
Your consumer credit score is measured by a variety of factors, including your bill payment history. When you are consistent with your bill payments and manage to complete the payments in full and on time, that habit will be reflected in your credit score. If you make frequent late payments, the same is true — it can damage your score over time.
So, if you want to give your credit score a boost, you should try to automate your bill payments and improve your bill payment history.
The Risk of Automated Bill Payments
As you can see, automated bill payments come with some clear benefits for users. While the practice is beneficial, it’s not 100% foolproof. One issue that comes with automated payments is the risk of not having enough for the payment to go through.
If you set up a payment and your checking account doesn’t have enough to cover the bill, the automated payment will fail. This failure can land you with a late fee from the provider and a non-sufficient funds (NSF) fee from your bank. An NSF fee is not small. The average NSF fee is $34 each.
You can avoid this scenario by making sure that you always have enough money to cover these automated payments the moment that they are triggered. These are some tips to help you accomplish this.
Set Up an Alert:
Set up a low balance alert on your checking account. This alert will warn you when the funds in your checking account are running low, which means you’ll be less likely to afford your automated bill payments. The moment that you receive this alert, you’ll know that you should avoid making unnecessary transactions and increase your funds in the account as soon as possible.
The default setting for this alert is usually $100. You can customize that threshold to be higher. Consider making the threshold the cost of one of your more expensive bills, like your auto insurance premium.
Follow a Budget:
Don’t just assume that you can manage your bill payments by the end of the month. Use a budget to be sure that you can safely afford all of them. With this basic financial tool, you can carefully organize your income into essential categories, including your upcoming bills. If you feel like you don’t have enough available for all of your bills, you might have to adjust some of your non-essential expenses and put those savings towards your bill payments.
Use one of the top budgeting apps to build your personal budget. The top budgeting apps can sync with your bank account. This will make it easier to stay on track with your spending categories, including your bills.
Does automation sound like the solution for you? Then, stop paying your bills the old-fashioned way and start automating your bill payments from now on.