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WZZM 13 ONLINE
(WZZM) - From paying bills through the mail to paying them online, technology has made things easier. Now many companies offer an even easier way for you to pay your bills -autopay.
That's when the amount you owe comes out of your bank account automatically on the same day each month. Companies love this because they get their payment quickly and easily. Many consumers love it too, thanks to its ease, but that doesn't necessarily mean you should use it.
According to Yahoo! Finance, there are three questions you should ask yourself before you switch to autopay. A 'yes' answer to any of the three should mean 'no' to autopay.
#1 - Is the payment amount different each month?
Jason Homminga of Grandville had this problem with his cell phone bill.
"I used to do autopay with everything. Last month, they mistakenly put an upgrade fee on our account. Neither of us upgraded our phones, so I had that $18 quickly removed."
Had Jason been on autopay, he probably wouldn't have noticed the mistake. Home phone bills, credit cards and utilities are other bills that differ each month, thus shouldn't be set-up with autopay.
#2 - Will your contract renew automatically?
If so, then again you should stay away from autopay. Jason nipped this in the bud with his low-cost beginner rate on his cable bill.
Satellite radio and online or magazine subscriptions would be other examples of items that renew automatically. Again, a 'yes' answer should mean 'no' to autopay.
#3 - Will you have to wait a full billing cycle before you receive credit in the event of an overcharge?
If so, just say no! This problem is often seen among internet providers.
Jason has added a fourth caveat to using autopay. He avoids autopay on loans because he prefers to get ahead sometimes by paying more toward the principle, thus saving money on interest.
There's no doubt, autopay can be an ally to keep you from making late payments. You just have to be wise like Jason when deciding when to use it.