6 Bills You Shouldn’t Put on Autopay, According to Financial Experts

Making payments online offers numerous advantages, such as steering clear of late fees allowing you to save more money , decreasing paper invoices and adding security But have you considered setting up autopay for your bills so they get paid sequentially?

What is autopay?

Autopay is an automatic payment mechanism that enables firms to directly extract funds from your bank account or bill your credit card at regular intervals for payments and expenses," explains Rikin Shah, a financial consultant and the founder of GetSure. "Its purpose is to simplify the process of handling ongoing charges.

This powerful tool in your financial toolkit simplifies monthly bill payment significantly; however, several considerations should be made before opting for autopayment services. Primarily, utilize automated payments exclusively for recurring monthly expenses provided you're certain about covering them entirely without strain. As Dana Marineau, formerly the Vice President of Communications and Brand at Credit Karma, cautions: "Failing to cover these costs fully might result in accumulating debt with added interest charges, potentially derailing your attempts to manage your finances efficiently." Therefore, she advises steering clear of autopay unless you have complete confidence in affording those bills outright.

Specifically, you may wish to refrain from having the following bills processed through autopay.

1. Annual subscriptions

You should avoid setting up automatic payments for yearly magazine subscriptions or monthly streaming services such as Netflix or Hulu, warns Shah. This is because you might overlook their active status and keep making regular payments even when you no longer require these services. According to a recent study conducted by C&R Research, 42% of people admit to continuing to pay for unused subscriptions. Additionally, the research indicates that individuals tend to understate their total expenditure on subscriptions by approximately $133 on average—a figure which is 2.5 times higher than what they believe they're spending. Furthermore, be mindful of the number of subscription-based services you utilize; maintaining too many can become quite costly. Personal finance specialists warn about imprudent spending behaviors. .

2. Utility bills

Avoid using autopay for expenses that change each month. As Shah explains, "Consumption and costs for utilities vary regularly, hence it’s best to examine the invoices and tweak your consumption as necessary," particularly during colder winters and hotter summers when heating and cooling may increase your energy or gas usage. Additionally, according to Shah, mistakes in utility bills frequently occur, making it crucial to develop the practice of checking your statement rather than relying solely on automatic payments and disregarding them afterward. Make sure to do this as well. stay away from using cash for specific invoices —including utility bills.

3. Broadband and internet

Even though broadband and internet charges seem like fixed monthly amounts making them suitable for automatic payments, tread carefully. Since these prices aren't controlled by governmental regulations, providers can increase costs at will. To manage finances wisely, verify your invoice every month to ensure you're not being charged beyond what was expected. This advice becomes particularly crucial when dealing with introductory rates, notes Shah. “Such discounted terms usually end after one year, thus examining statements lets you either negotiate lower fees or discover superior offers,” he explains.

4. Credit card bills

Credit card statements can pose difficulties with automatic payments since you'll aim to cover at least the minimum payment required, but your available funds might vary each month, making additional contributions uncertain. Effective management of your credit cards is crucial for maintaining good personal finances, so ensure you're aware of all transactions made. definitely should and definitely should not use a credit card for .

5. Auto insurance premiums

Auto insurance premiums are often due in intervals of once or twice a year, which can make for a hefty bill. If one of those payments hits your bank account when your balance is low, you may end up overdrawing and Face a penalty fee. Additionally, your pricing structures and insurance requirements might shift often; thus, ensuring regular reviews during each renewal cycle instead of setting it to renew automatically without reassessment is crucial. As per Shah, "Statistics indicate that motorists may secure more favorable terms by actively seeking new deals upon expiration rather than blindly accepting automatic rollover."

6. Memberships

Last, any charges like gym memberships The large retail chain where you're a member or your household’s zoo subscription shouldn't be set on autopilot renewal. Numerous memberships include automatic renewals, so without paying attention, you might find yourself enrolled for an additional year, despite having no intention of using them again.

Key considerations before enabling autopay

Although autopay offers convenience in managing bill payments, it's advisable to use this feature solely for expenses with consistent amounts such as mortgages and car loans. As Shah points out, "Using autopay for variable charges could result in unforeseen increases causing account overdraws." Moreover, consider adhering to these recommendations:

Utilize a credit card for automatic payments rather than using a debit card "This offers greater flexibility if you have to contest a charge prior to it being deducted from your checking account," explains Shah.
Regularly review your transactions to ensure the automatically deducted amounts are accurate. As Shah advises, "It's wise to inspect your accounts monthly for any inconsistencies or unauthorized payments."
Schedule calendar alerts to review your account balances prior to theautopay due dates, allowing time to deposit additional funds if necessary and prevent overdraft fees.
For bills that aren’t set up for automatic payment, designate a consistent, periodic interval for settling your bills. Set aside a chunk of time on your calendar, and aim to incorporate it into your daily routine, as suggested by Marineau.

Additional contribution by Stacey Marcus.

About the experts

Rikin Shah is the CEO of GetSure and a financial services advisor. He has more than 20 years of experience in financial services, including roles in investment banking at J.P. Morgan, in private equity investing at Stone Point Capital and as Head of Business Operations for Earnest, a student loan refinancing startup.
Dana Marineau serves as the CMO at Rakuten and previously held the position of VP of Communications and Brand at Credit Karma.

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