A popular benefit offered by financial institutions is the electronic bill payment. This bonus lets you specify an automatic schedule to pay all your bills.
However, there are some disadvantages to setting up automatic deductions to your checking or savings accounts. It is always a wise plan to weigh the pros and cons:
• The pros.
The biggest reason why people use electronic bill payment is that it is truly convenient—this plan can be set up once, and all bills are paid. No worries, no hassles.
Payments can be set for the minimum, or for the entire balance due. A bank transfer directly into their account pays many large payees—such as utilities and credit cards. For others who are not set up to accept such transfers, the payee gets a paper check in the mail.
This service eliminates many late payments, especially if there is a fixed due date. Responding to the increase in automatic payments, most companies have instituted massive late fees—in an attempt to make up for lost revenues through the decline in delinquent accounts.
• The cons.
Automatic bill payments carry an increased risk of overdrafts, rapidly accumulating large overdraft charges. If a deposit is inaccurate—a lesser than expected paycheck, for example—the payment could be made without enough money in the account, resulting in returned payments. Any change in pay dates could create another issue with automatic bill payment.
In addition, regular automatic payments can lead to customer lapses in diligence. Because the payments are easier, the user is less likely to examine the bill for overcharges, or payment for services that are unnecessary.
Even when paying bills automatically, it is always a smart idea to examine the bill periodically, to make sure you are charged the correct amount.