Should You Set Up Autopay on Your Credit Cards?

Most credit card companies allow you to set up automatic bill payment. You can arrange to have your card payment taken directly out of your bank account before the deadline by signing into your card account and selecting the “Payments” menu.

There are some big benefits of autopaying your credit card. But there are also some downsides to consider as well. Here’s what you should think about when making the decision about whether automating the process of paying your cards is right for you.

Benefits of autopay

The single biggest benefit of setting up automatic credit card payments is that you will never forget to make a payment since the process happens automatically. This alone may be reason enough to put your payments on autopilot.

See, if you are 30 or more days late paying your card, this tardiness will be reported to the credit reporting agencies. And the record of the late payment can send your credit score plummeting as much as 110 points if you have great credit and have never been late before, or around 60 to 80 points if your score already wasn’t perfect due to past late payments.

Being late could also trigger a penalty APR. This would mean your credit card’s interest rate would typically go up to around 29.99%. And you could be charged a late payment penalty of up to $41 by your card issuer.

There are other benefits of autopaying your card besides avoiding these undesirable consequences. It could be more convenient to not have to think about making payments, for one thing. And if you can set up autopay to repay your full balance instead of just your minimum payment, you won’t have to worry about owing interest on your card.

Downsides of autopay

Automatic payments do have some downsides, though, depending on your situation.

One big problem is that having money being taken out of your checking account automatically without your input could become a problem if your bank account balance isn’t always high enough to cover the cost of your card payment. If you try to make a payment with insufficient funds in your bank account, you could get hit with an overdraft fee, which may be around $35. You could also see your bank account balance go negative and incur fees for that as well.

If you’re autopaying your card, you may also be less likely to track your spending carefully or to take the time to think about whether your card purchases are worth it since they’ll just be paid for from your bank account without you having to think about it. If you don’t sign into your card account regularly because of the autopayments, you may also be slow to notice and report fraudulent charges.

If you don’t autopay your card’s full balance and pay only the minimum instead, you could end up in credit card debt and incur interest costs. While you may have intentions of going in and paying the rest of the balance off if you set up a smaller automatic payment, you may be less likely to do that if you know the minimum has already been paid.

These are big downsides, especially if autopaying your card ends up costing you overdraft fees or makes you less accountable to yourself with regards to your spending.

Is autopay right for you?

If you are confident that you will have the money for your automatic payment of your full statement balance to come out of your bank account, and if you know you’ll still check your card regularly to monitor spending and look for fraud, then there is no reason not to set up autopay.

But if you find yourself spending more when you don’t have to confront your card bill each month, you may be better off just putting a note on your calendar to pay your card manually instead.

Ultimately, you need to think about your personal finances and habits to make this choice, keeping in mind both the benefits and downsides of autopay outlined here. If you consider these issues, you can make the choice that’s right for you.

Alert: highest cash back card we’ve seen now has 0% intro APR until nearly 2025

If you’re using the wrong credit or debit card, it could be costing you serious money. Our experts love this top pick, which features a 0% intro APR for 15 months, an insane cash back rate of up to 5%, and all somehow for no annual fee. 

In fact, this card is so good that our experts even use it personally. Click here to read our full review for free and apply in just 2 minutes. 

Read our free review

Read More: Should You Set Up Autopay on Your Credit Cards?

2023-09-04 10:30:22

Notify of
Inline Feedbacks
View all comments