Hey I'm Adam Jusko from ProudMoney.com and in this video i'm gonna
look at the pros and cons of automatic bill pay and i'm gonna tell you why I
choose not to do it. Before I do that I would ask you to please subscribe to our
YouTube channel if you have not already and if you have I thank you for doing so.
So we're going to look at the pros and cons, the advantages and disadvantages, of
automatic bill payments and in that "con" section, I'll tell you why I choose
not to do automatic bill payments, at least as much as possible. Now, if you
don't know, auto bill pay, or automatic bill payments, is essentially allowing
whoever you owe money to to either get direct
access to your bank account or to your credit or debit card to pay your bills
each month. So it might be your cell phone service, it might be utilities, it
might be your credit card company pulling from your bank account --- whoever
it is, you're giving them access to take your charges out for the month,
directly from you, without you actually having to do anything. The money is just
taken out. Now there are advantages to doing this and the big one is that your
bills get paid and they get paid on time, so you don't have to worry about
there being any possibility of late fees or anyone coming after you for a
payment that you forgot to make. And for a lot of people that is a big
plus, especially if you're someone that maybe has had problems in the
past with that or maybe it's hurt your credit and you're trying to rebuild
your credit. You know, making sure your bills get paid on time every month is a
big step towards making sure you don't sort of end up in that same hole again
or it can help you to climb out of that hole. Now it's obviously easy and
convenient, too. You don't have any stress about the bill, you don't have
to worry about sending your payments in by mail, so there's really just
this whole sort of load off your mind in terms of getting those bills paid.
And you also don't have, you know... if you have mail, having to go to
the mailbox and all that kind of stuff. In essence you don't have to
think about it, it just gets done. And that is a huge thing --
you have a lot of things going on in your life and so the automatic bill
pay allows you to get this thing done, you make sure everything's on time, and
you don't have to worry about it. But the fact that you don't have to think
about it, it's also to me the biggest downside of using automatic bill payment.
It's really sort of one of the reasons --- or the big reason I guess --- that I don't
use it. My issue is that every month when your bill is just being taken directly
out of your account, you're not necessarily thinking about it in the
same way as you would have if you had to pay that bill every month. You're kind of
not feeling the pain of that payment and you're not necessarily tracking your
payments as well as you would otherwise. When I have to take a little
extra time to pay my bills manually I think more about the money and thinking
about "how much am i spending?" "how does this spending correspond to
what I've spent in the past?" "is there a reason that this bill has gone up?"
and "do I even want this service that I'm paying for or this product that I'm
paying for anymore?" Every time I have to do that and either scan down a
paper bill or look at something online and see the transactions, it
makes me think a little bit more about my spending. When it's just coming out,
you think less about your spending, so obviously that means that you can easily
overspend. And this is part of the reason that companies want to
get you on auto-pay. One is that it's cheaper for them because they don't have
to send you paper bills out as much if you do auto pay. But the other
thing is they also know that you are less likely to cancel their
service if prices go up, you're less likely to notice if there's new charges
that maybe weren't there in the past. They might tell you about
those charges but you might see them in a way that doesn't necessarily
correspond to when you are paying that bill or when it's being taken out of
your account. You probably know that services like magazine
subscriptions or health clubs often will give you some free months up
front and then they will automatically start charging your credit card beyond
that time. And you can cancel it whenever you want to, but they also know
that what generally happens is you don't cancel it at all. Because when the money
is being automatically taken from you, or it's automatically going on to a credit
card, most people are going to be lazy, and they're gonna let those charges
continue to happen, even if they don't necessarily
want the product or service anymore that they originally signed up for. So
that's sort of the big thing to me. You need to feel the
pain, you need to keep sort of track of what's going on in your
life and not sort of let yourself get lazy --- and I think automatic payments let
you do that. Now some other issues with automatic payments... If your balance is
not high enough and you haven't tracked it very well you could have someone
coming in trying to take money out of your account --- you have insufficient
funds, you're gonna get charged from your bank, you could get a late fee from the...
whoever wants their bill paid as well.
Stopping can also be hard. This goes a little bit along with the laziness, but
on the other end, sometimes you also have companies that... they're more
than happy to get you on auto bill pay, and they will hound you until
you start doing it, but then once you want to get rid of it, it's a lot harder.
You might have to make a call, you might have to sit on hold for a while, whatever
the situation is. Oftentimes getting out of auto pay is much more difficult
than getting in was. And then the last thing is, when you have... in particular,
when you allow someone to access your bank account, either directly or
via a debit card, you have that possibihttps://www.youtube.com/commentslity of someone coming
in and actually stealing it. If the company is hacked and someone can get
into your bank account then obviously they then have the possibility of
getting in and stealing your money. And that can be a hassle and you may lose
some money before you kind of get it all worked out. So those are all
things to consider. Now for many people I understand that the pros outweigh the
cons, but I do believe that there are cons to consider, and I hope I've sort of
given a balanced view of them --- even though my inclination is to go on
the "con" side of things. Thanks for watching. Please go to ProudMoney.com
for other personal finance news and reviews and other good stuff too. Thanks.
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