The Positives and Negatives of Paying Your Bills Automatically on Your Credit Card

Paying Bills Automatically on Your Credit Card

If you’re the type of person who struggles to remember to pay your credit card bill on time each month, you might be able to benefit from paying bills automatically. Almost all credit cards offer customers the option of making an automatic payment via direct debit.

Not only is it much easier to avoid missing the payment due date and incurring penalty charges, but it’s also easier to set up a debt reduction payment plan using this option.

It’s relatively simple to set up your direct debit agreement to begin paying bills automatically, but it’s very important to select the right payment options, or you could find yourself in trouble.

Most credit card providers offer online access to your account. If you haven’t done so already, set up a log in and password for your credit card’s online banking facility. Once inside your account, you should be able to provide your transactional bank account details for payments to be deducted from.

From there, you should also see an automatic payment option. Select this and then look for the option that allows you to choose what date your payments will be made. Not all credit card providers offer this and will deduct your payment on the default due date, but there are some that will allow you to nominate what date you’d prefer your payments were made.

Be very careful about the type of automatic payment you choose to make, especially if you’re trying to take advantage of the interest free days offered on your credit card.

If you elect to pay the default amount, this will usually be the minimum payment due, as shown on your statement. This will cover the interest due and a small portion remains to pay off a bit of your balance.

However, if you select the pay balance in full option, this will repay the full amount of any charges you made through the month, plus any interest due. Of course, if you frequently repay the entire balance, you should find there will be no interest charged on the purchases you made using your card throughout the month.

While paying bills automatically on your credit card offers plenty of benefits, as well as an easier way to keep on top of your payments, there are some downsides to watch out for.

Be careful that the amount of payment you’ve chosen won’t be higher than the balance available in the account you’ve elected to withdraw your payments from. You risk running your other account into overdraft this way.

As your payments are being made automatically, there is also a risk that you may not check your statement as frequently for accuracy.

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