I’m not sure I am the first to say this, but I am certainly ready to start providing the advice that paying bills via autopay is NOT a good idea. Certainly, the convenience and ease are attractive – set it up one time and never worry about paying your bills on time again. Well, not so true. You do have to worry about paying on time. In fact, you have to worry just as much, if not more.
While technology certainly provides its conveniences, these systems have errors. In our practice alone, we have seen a number of instances where an autopay did not function properly. Your bank can go through system chances, obtain software updates, or even sell your account to another creditor. Any of these events can cause the autopay function to not work properly, or at all. A glitch in your creditors system means a payment is not being made. Often times, it goes unnoticed, as not everyone looks at their bank statements every month to reconcile whether each bill was paid. We have seen some people’s autopay function inexplicably shut off- causing the consumer to miss months of bills-ultimately causing great harm to their credit.
A creditor can make changes to its terms, and for those on autopay, this can present a problem. On an installment account (such as auto loans or home mortgages) payment terms can change due to tax increases or decreases. Many consumers who are on autopay with their accounts will often ignore the creditor’s monthly bill, knowing that the autopay function will just cause the bill to be paid. Who needs to open more mail? But, not paying close attention to these little potential nuances can result in a payment not being made, or a full payment not being made.
What happens when one creditor sells its accounts to another? Often times, store credit accounts can be shifted over from one bank to another. When a new bank takes over your account, do they automatically step right into the shoes of your former creditor and continue to automatically take your money? No. They don’t. If you do not catch the notice from your bank that advises you that your account has been transferred, then you won’t know to reconfigure your autopay. We have seen this instance a few times as well. When one bank took over the accounts of another, many consumers on autopay ended up unwittingly missing payments.
When payments are not made on time, the result is a blemish on ones credit report. Seems a bit unfair that one would seemingly be taking the responsible step of assuring that all of their bills are automatically paid on time, only to later find that they are being marked late on payments. This happens often, however. To successfully handle your accounts on autopay, you still have to open your bills and review your statements. You can make no assumptions that all is being handled. Otherwise, its best to continue to manually pay your bills to assure that the correct amount is being paid and on time.
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