Late payments on your bills can lead to late fees and a decreased credit score — not to mention stress and headaches.
But autopay can solve all these problems, and it's easy to set up.
Autopay is a way to automatically pay your bills every month, typically through a recurring bank transfer from your bank or credit union or by credit card.
How Does Autopay Work?
Autopay, short for automatic payment, is an account feature that you can use to have bill payments taken out of your account, without you having to do anything.
Rather than manually entering payment details each month when a bill is due, your bank account will run an automatic bill payment instead.
You can designate the amount and the specific date for the payment to run, and link it to your checking account or credit card.
Autopay is a convenient way to ensure you pay your bills on time and avoid late fees and penalties. It also saves you time and effort on your monthly budgeting, since you won't need to sit down and make individual payments each month.
RELATED: What Is Early Direct Deposit and Which Banks Offer It?
Pros and Cons of Autopay
Some people find that setting up their bills on autopay makes life easier, while others prefer full financial control.
| Pros | Cons |
|---|---|
| Less hassle. You don’t need to remember due dates or manually log in to make a payment. | Requires updates. If you change your bank or open a new credit card, you’ll need to update your autopay details. |
| Save money. You'll avoid accidental late fees and potential dings to your credit. | Risk of overdraft. Money might be withdrawn when you're not ready, which could lead to overdraft fees. |
| Space out payments. You can schedule payments throughout the month (before the bill due date!), which can help your cash flow. | Lack of oversight. If you don't review your transactions, it can be easy to overlook fraudulent charges or get complacent about monthly subscriptions you aren't using. |
When Should You Use Autopay?
If you have a busy schedule, you may want to consider setting up autopay so payments don’t accidentally fall through the cracks.
But you probably shouldn’t use autopay if you live paycheck to paycheck or budget on a per-paycheck basis. Not having a buffer in your account could lead to overdraft fees.
The great thing is that autopay can be set up anytime, so you can always set it up when you feel financially ready.
RELATED: What Is Overdraft Protection?
Tips for Autopay
Setting up autopay is a great way to manage your recurring bills. Here are some tips to get started:
- Prioritize fixed expenses: Set up recurring payments for your fixed monthly expenses, such as rent or mortgage, utilities, insurance premiums, and loan payments.
- Use a dedicated account: Consider using a separate checking account specifically for autopay. This way, you can easily track these payments and ensure that you always have enough funds to cover them.
- Set up alerts: Set up alerts through your bank to receive updates when payments are processed, so you can monitor your account and make sure everything is running smoothly.
- Regularly review and adjust: Your financial situation may change, so keep a spreadsheet with a list of bills and which accounts are set up for autopay. Update any changes in income, expenses, or due dates for bills. Review your bank statements to confirm that payments are being processed correctly.
RELATED: How Many Bank Accounts Should I Have?
How To Set Up Autopay
Setting up autopay is pretty straightforward. You can generally find it when you sign into an online account for whatever service you need to pay for and look for the section called “Make a Payment” or similar.
During setup, you can decide which date you’d like the automatic payment to begin, the amount to pay, and the date you’d like your automatic payments to end (if ever).
Keep in mind that if you’re already paying the initial bill and would like to set up autopay to automatically process payments in the future, you'll need to set up autopay to start the following month — not the current month. Otherwise, you might be paying the same bill twice!
Once you have gone through the setup process, some bill pay portals will send an email confirmation, while others may simply have an autopay icon that you can see has been enabled.
It’s a good idea to keep an eye on your bill pay account for the first month or two afterward to ensure the necessary bills have been processed correctly.
FAQs
Does autopay cost anything?
The autopay feature itself is typically free. However, depending on your method of payment, you may incur additional transaction fees, such as credit card processing fees.
What’s the difference between bill pay and autopay?
The key difference between a bank’s bill pay service and autopay is the frequency. Bill pay is typically a one-time payment from your bank account or credit card, while autopay is set up to make recurring payments on a specific date, usually as an electronic/ACH transfer.
TL;DR: Should You Use Autopay?
Autopay can save you from late fees and protect your credit score. But it's not a “set it and forget it forever” solution — you still need to stay engaged with your finances.
Consider using a dedicated checking account just for autopay to make tracking easier. Set up bank alerts so you know when payments go through, and keep a buffer in your account to avoid overdraft fees.
Remember: Autopay should simplify your life, not make you financially lazy. Review your statements regularly and don't use autopay if you're living paycheck to paycheck without a financial cushion.
When done right, autopay turns bill paying from a monthly stress into background noise, letting you focus on bigger financial goals.
Learn With Erika
- Free Travel Secrets Workshop
- Learn how to use the fine print to book your next vacation practically for free with Erika's step-by-step system
- Free 5 Day Investing Challenge
- Learn how to get started as a beginner investor and make your first $10,000
- Free 5 Day Savings Challenge
- Discover how you can save $1,000 without penny pinching or making major life sacrifices
- Join Erika Kullberg Insiders
- Ask investing questions, share successes and participate in monthly challenges and expert workshops
