This is the way you should be paying your bills
Paying bills is about as much fun as root canal surgery, so it’s perhaps understandable why they become an afterthought for many people. If you’re disorganised, busy, or simply have your mind on other things, it’s so easy to miss a deadline for your payment which, while seeming harmless, can have an impact on your credit score.
But what’s a simple billpayer to do, other than covering your fridge with an elaborate pattern of post-it note reminders? Well the good news is there are plenty of options.
Automated payments are the salvation of the disorganised billpayer, providing a simple set-and-forget system that lets you fulfil financial obligations without lifting a finger.
How do automated payment systems work?
With most automated payment systems, a money transfer is regularly scheduled from a checking account or credit card. These transfers happen between you and the company to pay a recurring bill. When used correctly these can be a great way to get a sense of your outgoing funds ahead of time, which can help become an effective budgeting tool.
What are the most common automated payment systems?
There’s no shortage of automated payment systems currently on the market (and odds are there’ll be more before too long, but two of the most trusted options available in Australia currently are direct debit and BPay view:
- Direct debit – This method is ideal for trusted services like insurance premiums, rates and utility bills an involves an electronically generated transaction that sends funds straight out of your savings or credit card account to the service provider.
- BPay view – This option provides another choice for seniors, which helps you avoid clunky paper statements. Invoices are sent to your online banking provider, and the system sends you an SMS when the payment is due, letting you cover it with one click.
What are the advantages and disadvantages of automated payment systems?
Advantages
- Time saving – Anyone who’s stared at an ever-growing pile of paper bills would agree that this is the case. Automated payment systems transfer money between accounts in seconds.
- Convenient – Automated payment systems allow you to pay your bills no matter where you are in the world, as long as you’ve got an internet connection you’re golden!
- Budget – These electronic payment systems also give you an idea of the sort of expenses you have coming around the corner, making it easier to budget for the future.
Disadvantages
- Overdraft fees – While automated payment systems are often marketed as “set and forget”, you do still have to make sure there’s enough money in your account otherwise you might be slugged with an enormous overdraft fee.
- Potential costs – Also, it’s important to be wary about the company you’re conducting the transfer with. Some incur additional charges for transfers, and these can add up.
- Difficult to stop – While these systems can be easy to set up, they’re often difficult to stop. Sometimes you have to get notice in writing for your bank and credit provider.
Do you use automated payment systems? Or would you rather put a fail-safe in place, instead of setting and forgetting? Let us know in the comments section below.