It seems like everyone has an endless to-do list. It’s stressful trying to remember everything on your plate. This is why I’m a huge fan of automating things. One thing that you can automate to alleviate stress? Your monthly bills.
With so many bills coming in each month, things can easily get lost. I know that I pay rent, internet, utilities, my credit card and a compost service every month. (Not to mention that I pay a few larger bills biannually!) They all fall due on different days, and trying to stay on top of them all is a stressful nightmare. And while it might not seem like a big deal to miss one payment, or to pay a few days late every so often, it is.
Late or missed payments can affect your credit score. They send the message to future lenders that you can’t handle the responsibility of monthly payments. Missed payments can drop your score by a lot of points in one go, leaving you with a score to improve over the course of months or even years.
That’s why auto billpay are a gift from the financial gods. Not only do they help reduce stress, but they ensure that you never miss a payment, boost your credit score and make you a more responsible adult.
How to Set Up Automatic Payments for Your Bills
Setting up auto-pay is usually pretty simple. Head online to the places you owe money each month — your credit card company, student loan lenders, utility providers, etc. — and find the payment options. Look for options that say “Recurring Payments” or “Auto Payments.” Enter your payment info, and you’re done! The account you link will be automatically billed each month.
As a bonus, many companies also let you pick which day you’d like to be billed each month. If you like, you can time payments to come out of your account right after payday so you know the money is in there. It’s a simple, stress-reducing practice!
There are apps that can help you set up automatic payments too. Budgeting app giant now has Mint.com automatic payment options. Prism is another app to look into. It lets you add in your paydays and your billing days, and you can pay bills directly from the app. Unbill is a third option that does the same thing — this time with an added bonus option of splitting bills with friends. This is great for those with roommates!
We’ve reviewed all of the major personal finance apps so you might want to check them out.
Using Your Credit Card for Auto-Pay
Here’s where auto-pay can get a little hairy.
If you want to, you can use a credit card account to set up automatic payments on things like internet, utilities or maybe even rent.
Personally, I use my credit card to pay for everything. It’s a great way to build up rewards points and keep my credit score high. For those who carry no debt, using credit cards is actually very important. It establishes your credit history and shows you are capable of making on-time payments.
However (there’s always a “however”), if you carry credit card debt at the moment, or if you struggle to pay off your balance each month, be wary of using your credit card to pay for other bills. You don’t want to amass a huge amount of credit card debt each month via automatic billing if you can’t pay it off.
The best practice for credit card usage is to charge an amount that you can pay off in full each month. Carrying a balance month to month means that you’ll be charged interest. Credit cards are notorious for having the highest interest rates around, so you lose money quickly by paying those rates.
Try charging one automatic payment to your credit card that you know you can pay off each month. You can set up other automatic payments to come directly out of your checking account, so you know that there will be no problem paying it.
Treat Investing Like A Bill
Automatic billing paying might sound obvious, but what about investing? You can even use automatic bill payments to pay yourself first. Treat your investing goals as a bill. Set aside a $100, $250, $500 or more a month to your investment account. Using a robo-advisor service like Betterment makes this easy and automatic. Most of the new financial services have no minimum deposit and make investing as easy as paying a bill.
If you set aside $100/month in one year you’ll have $1,200, and that’s not even counting possible returns on your investment.
Automatic bill pay is a great way to simplify your financial life. It’s one less thing to worry about each month. You can even let an app do all the work for you! Setting up automatic bill pay is a good idea for almost everyone. Why stress when you don’t have to?
Do you use automatic bill payments? How do you have yours set up?