3 Reasons the Middle Class Should Be Using Autopay for Their Monthly Bills
Written by
Heather Altamirano
Edited by
Zuri Anderson
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It seems like everyone has such a busy schedule these days, and the last thing you want to do is keep track of when bills are due on top of life’s other responsibilities.
To help stay organized, many set up autopay — a routine payment from a bank account to a company or vendor for recurring bills like insurance, car payment, mortgage, credit cards, utilities and retirement contributions.
Autopay has several benefits including reducing the stress of juggling multiple monthly payments. Here are three reasons why the middle class should take advantage of autopay.
Also learn about several mistakes people make when they put their bills on autopay.
Time-Saver
Sometimes there’s just not enough hours in the day, but autopay can cut down on time managing bills so you can spend your time elsewhere.
“Those in the middle class are often the biggest multitaskers — school-aged children, full-time jobs, volunteering, and oh yeah, family budgeting,” said Allison L. Birmingham, certified wealth strategist (CWS®) and assistant vice president senior wealth management advisor with Greenleaf Trust.
“When the grip is tightened on a budget, it is best practice to use an autopay strategy for recurring monthly expenses. Similar to automatic deferrals to a retirement plan, or savings account, this action removes an item from the to-do list.”
Avoid Late Fees
When you miss a payment, a late fee is applied to your account and they add up fast. Credit card companies were notorious for slapping consumers with a hefty late fee of up to $32.
However, the Consumer Financial Protection Bureau (CFPB) enacted a rule last year that lowered the fee to $8, which is an average savings of $220 a year. But that might not last long.
The Trump administration has laid off hundreds of CFPB workers and halted operations as the organization’s fate is determined in court, per CNBC. While the future is uncertain, having credit card payments on autopay will save you money.
Improved Credit Score
Late payments can negatively affect your credit score. Many credit agencies report whether consumers make payments on time, so using autopay can prevent late payments and improve your score, which is essential for securing loans and better interest rates.
While autopay can relieve a lot of headaches, Birmingham noted that consumers should continue to monitor their accounts.
“Oversight of the common utility bills still remains necessary as many have lost grip on the monthly extras especially with regards to monthly technology — think Netflix, Paramount, etc.,” she explained.
“It is recommended even with an autopay strategy to review the monthly budget at least every several months to remain on track with your financial goals.”
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