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  • Writer's pictureMarc Primo

Why You Shouldn’t Use Credit Card Auto-pay

Updated: Apr 3, 2020

The following is an article “Why You Shouldn’t Use Credit Card Auto-pay” by Marc Primo.

A great number of consumers are now shifting to credit card auto-pay as it not only promises them cashless convenience, but also helps in preventing missed payments, late fees, and interests. Ultimately, these negative entries on your financial record can tarnish your credit profile so it would be best to avoid them. But is credit card auto-pay really a blessing or something that’s closer to being a hassle?

Busy consumers who don’t have the time to regularly review their financial records and transactions would probably go for credit card auto-pay for how it helps them schedule payments and lessens their runs to ATM machines for cash. For more than a decade now, consumers have preferred to go cashless and banks are loving it. With less paperwork, the guarantee of reliable transactions, and secure data management, we may have finally seen the last of paper bills.

However, before you go cashless, credit-card auto-pay is one alternative that also has its own pros and cons.

Here are three reasons why you should think twice before you apply for the service.

It makes you dependent. One thing that can change when you switch to auto-pay is your ability to take control of your own budget. Sure, you can check your financial records after payments if they are correct but since you have set them on regular dates and regardless of how much is in your bank account, the possibility of not being able to plan ahead for your other expenses is very real and can be difficult. Another fact is that spending, almost always, should hurt. Setting them on auto-pay may let you think that everything is according to plan but the truth is that you are less able to practice better financial judgement because you don’t experience the sting that your spending really does. Being responsible and paying your fees manually lets you manage your money better than just relying on auto-pay.

Fraudulent transactions are on the rise. Not to scare you but these days, fraud attacks are on the rise by 30% during the 3rd quarter of 2019 and auto-paying via credit card is one of the ways you can be a victim. Nearly $25 billion are lost to credit card fraud per year, so you better monitor and check your transactions regularly and if you can, limit your card use so that you can track every dollar you spent easily. If you do become a victim of credit card fraud, the stress and inconvenience of reporting and applying for a new card can take a toll on even the most patient of people. And what if you are in dire need of money and you can’t access your accounts due to a pending investigation? Manually paying your bills and purchases instead of setting them on auto-pay lets you review your spending and helps you avoid questionable transactions from scammers.

Frequent overdrafts. Another thing that can prove to be more inconvenient when you opt for the auto-pay feature is the possibility of overdraft. Yes you get to avoid late fees and interest charges but overdrafts also result to penalties too so there’s no ‘win-win scenario’ here really. This especially applies to those who are living from hand-to-mouth, or paycheck to paycheck, because expenses vary every month, or even daily. As long as you have a good cash flow and plenty of money in your bank account then auto-pay is a good idea. Otherwise, you’re better off going to the bank and paying your monthly fees over the counter.


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