Sometimes good tools go bad.
key points
- Autopay can be a great tool for paying bills on time, but it only works if you can keep a buffer in your checking account to cover withdrawals.
- If you don’t have enough funds in your account, Autopay may cause you to go into overdraft, which could result in costly overdraft fees.
- There are many other ways to make sure you remember important due dates, from digital methods — like text reminders or phone calendar notifications — to analog tools, like the tried-and-true sticky note.
As someone who is somewhat, let’s call it, “memory challenged,” one of my absolute favorite personal finance tools is Autopay. Lots with a due date set to automatically pay each month, so I don’t have to worry about late fees when something slips my mind.
And yes, autopay works for most bills. Utility companies, cellphone providers, credit card issuers — everyone is more than happy to let you set-and-forget your monthly bill.
No matter how much I love Autopay now, though, there was a long time in my life when I didn’t dare use it. Not because it wouldn’t have been useful – it certainly would have been – but because I couldn’t guarantee that the money would actually be there when they went to pick it up.
autopay dilemma
The major downside to autopay is exactly what makes it useful: payments are made automatically each month without any intervention.
If you’re in a position where you can always have a buffer of $1,000 or more in your checking account, that’s great. You never have to worry about which bill might automatically pay this week, because you always have money to cover any automatic withdrawals.
On the other hand, if you’re living paycheck to paycheck (like about two-thirds of American consumers) then autopay can be a nightmare. That’s because Autopay is trying to take that money out every month — whether it’s for withdrawal or not. Or, perhaps worse, Autopay could withdraw your last few dollars, right when you need them most.
This can be especially painful if you’ve forgotten about autopay (which isn’t uncommon; after all, I set up autopay because I was terrified of forgetting my due dates!) In this case, you can make purchases at the same time. (or three) when autopay kicks in on your account, causing you to overdraft.
The only thing worse than overdraft fees? Multiple overdraft fees.
Lesson learned: never set up autopay unless you’re certain you’ll keep enough funds in your account to cover the charges, plus any other purchases you may need to make.
Other Ways to Remember Due Dates
Autopay is undoubtedly a great tool. But this is hardly the only way you can work to prevent missed dates. Here are a few suggestions:
- Text or email reminders from your issuer or provider: Many companies will let you opt-in to text message and email bill reminders. You can also set up push notifications on your phone if the company has an app.
- Digital Calendar Reminder: Modern smartphones are packed with great productivity tools. Your calendar app should let you set tasks and reminders. You can even have them repeat automatically on the same day every month, or at regular intervals. The same thing can be done in your Microsoft or Google Calendar.
- Physical Calendar: Some people simply do better when things are physically in front of them. An old-school paper calendar with your due dates circled in red marker, kept somewhere handy where you’ll see it every day, can help you stay on track.
- sticky notes: My go-to method for analog reminders is the tried-and-true sticky note. Even using autopay these days, I still keep important dates on my computer monitor so they’re never out of sight or out of mind.
You can use any of these methods — or something else entirely. It doesn’t matter if it’s a common trick or totally unorthodox, as long as it works for you.
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