We live in an age where technology is here to make our lives as easy and as virtual as possible. This also applies to finance, where we can set up auto payments on almost any bill. Auto payment is an automatic recurring transfer from an account used to pay monthly bills. This feature can be beneficial and/or detrimental to your finances if you misuse it.

As always, there are pros and cons to all financial systems. And things work for everyone differently. Find out if auto payments are appropriate for you below.

The Benefits of Auto Payments

Automatic payments are convenient; there is no way around that. Rather than sending a check, fielding phone calls, or transferring funds, it is all done for you through your bank or the company you are paying. This can also be beneficial if you are forgetful or disorganized regarding your finances.

Automatic bill pay can also come with monetary benefits, such as a reduced rate or improving your credit score. And, often, paying through your bank is much more secure than other forms of payment.

The Down Side of Auto Payments

Auto payments are great until you don’t have enough money in your account to cover your bills. Then, overdraft fees can be hurtful to your budget and financial goals. If you often struggle to make ends meet, auto pay may not be for you. Or if your income or bills fluctuate drastically from month to month, it may not be advisable to use auto-pay. Also, depending on your bank, the payment may not be instant. You may have to set up the payment before it is due to avoid late fees.

Using auto pay can be a helpful tool that can set you up for financial success. If auto-pay seems right for you, setting up this feature wisely is in your best interest. For bills that are the same each month, it can be easy to set this up through your bank. For accounts that vary each month, it may be best to set up directly through the company. And make sure to sign up for alerts! If you are low on funds, an alert can save you an overdraft fee!