Should you automate your credit card payment?
Perhaps you’ve heard of how automating your payments on utilities, loans, and credit cards as well as transfers to savings can help you avoid late fees and force you to save money? I know I have, and if you have been involved in the personal finance community for long, chances are you have too! I have scheduled my payments (bills and savings) on and off for a couple of years, but while I am perfectly willing to pay bills online (save a stamp!), I always disable automatic payments. I just really like the control of making the payment when I’m ready, I guess.
I think part of my opinion on automating payments has to do with my control-freakedness – that is, I am pretty against scheduling credit card payments. The way it works in our house is that we make 2 credit card payments per month – one for each paycheck. Each friday that I am paid, I pay the entire balance of the credit card.
However, I am rethinking my stance, in spite of my control freak tendencies because last month ****gasp** I carried a balance!
I carried a balance because we were so busy that I didn’t get bills paid until a week after my paycheck came. Therefore, I forgot the credit card payment as well. Now, we weren’t charged a late fee or given an interest rate increase, and the interest charged was like $8.00, but I wasn’t very happy. The incident has gotten me thinking: should you automate your credit card payment?
There are a couple different ways to automate your payments. The first is to set it up so your entire balance is paid on or before the due date, thus ensuring that you pay off your credit card entirely every month.
- No Late Fees – an automatic payment ensure you bill get paid on time, every time.
- Forces you to pay the entire balance – assuming, of course, that you automate payment in full.
- No interest charges – no carried balance means you are not charged interest.
- No interest rate hikes – no missed payments means no penalty interest rate hikes.
- Overdraft fees – Say you spend too much money on the credit card one month. Your payment due date comes around and it pulls the entire balance out of your checking account, but because you spent too much money that month, there is not enough money in your bank account to cover it. The payment on the credit card will be made, but you will incur overdraft fees, which run anywhere from $20-$50 per overdraft!
- Not enough money to cover bills – this problem speaks to a spending issue. It is very easy to overspend with a credit card, and if you do, you have to pay the piper.
The second is that you set it to automatically pay the minimum balances on the due date every month, ensuring that you don’t get charged any late fees or are given an interest rate hike for late payment. This is a great way to go when you are trying to pay off credit card debt!
- You know it gets paid by the due date – because you at least made the minimum payment, you will not be charged a late fee or higher interest rate
- No late Fees
- No Interest Rate Hikes
- Interest Charges – because you are not paying off the entire balance, interest will be charged on the remaining balance
- Overdraft Fees – maybe you are running your account close and don’t have enough money – you will incur overdraft fees!
I really like being in control of when payments are made. I will happily pay everything online (aren’t stamps and checks expensive?) but I don’t want it to be automatic…I just don’t like the loss of control.
Do you automate your credit card payment, or any payments for that matter?
Linked up at:
DIY Sunday Showcase, Think Pink Sunday, SuburbsMama Link Party, Sunday Showcase, Happiness Is Handmad,Nifty Thrifty Sunday,That DIY Party, It’s Party Time, Sunday Showcase, Mommy Monday Blog Hop, Around Tuit, Mix It Up Monday, Creative Mondays, Sweet and Savory, Show Me Your Plaid Monday,Bloggers Brag ,Made By You Monday ,Monday Pin It Party ,Motivate Me Monday ,Thoughtful Spot Weekly Blog Hop ,Monday Funday ,Busy Monday ,Marvelous Monday ,Titus Tuesday ,Tuesdays at our home ,Tell Me About It Tuesday ,Tip Me Tuesday ,Tuesdays With A Twist ,The Inspiration Board ,Tutorial Tuesday ,Create Link Inspire ,Making a Home ,Something Fabulous Wednesday ,The Mommy Club ,Wow Me Wednesday ,Wake Up Wednesday, Adorned From Above Wednesday, Cast Party Wednesday ,Your Whims Wednesday ,The Project Stash ,Whimsy Wednesday ,We Did It Wednesday ,Wednesday Round Up ,Wine’d Down Wednesday ,Inspire Me Wednesday ,Whatever Goes Wednesday ,Something Fabulous Wednesday ,Wow Me Wednesday ,The Pin Junkie ,What To Do Weekends, Inspiration Gallery, Artsy Corner, Inspire Us Thursday, Thrifty Thursday, Weekend Reads, That’s Fresh Friday, KitchenFun and Crafty, Friday Frenzy, Inspire Me Please, Craft Frenzy Friday, Anything Goes, Pin Me Linky Party, Pin Worthy Projects, Friday Favorites, Best of The Weekend, Link Party Palooza, Friday Flash, Flaunt It Friday, Family Fun Friday, Frugal Friday, Weekend Bloggy Reading, Saturday Show and TellS, aturday Spotlight, Strut Your Stuff Saturday, Saturday Sparks, Saturday Sharefest, Serenity Saturday, Show and Tell Saturday, Get Schooled Saturday, Dare to Share Saturday, Skip The Housework Saturday, Silver Penny Saturday, A Little Bird Told Me