Majority of Americans Are ‘Shunning’ Autopay — Should You?
Written by
David Nadelle
Edited by
Brendan McGinley
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The general consensus is that you should set up automatic payments for recurring bills. It’s a convenient way to make sure they get paid on time and keep your credit score in good standing. Then why do only 41% of consumers choose to use autopay, according to a PYMNTS study?
As The Century Foundation recently reported, rising utility costs are crushing Americans’ ability to get ahead. The independent think tank said that families will pay an average of $976 to heat their homes this winter, according to industry experts. This is a 7.6% price hike after record-breaking summer cooling costs. The average amount owed on utility bills has increased by 32% since 2022, from $597 to $789.
We live in a time of increasingly financial disparity. America is wealthy, but its economy has never been this unequal and more people are living paycheck to paycheck than ever before. As a result, more people are shunning autopay, especially those who belong to older demographics and lower wage groups.
Study Shows Bills Are Increasing
According to PYMNTS, more people use autopay for discretionary spending on streaming services (63%) than on essential expenses like rent (22%) or utilities (33%). But the economy and demographics are playing the biggest roles in a consumer’s payment preference.
It’s not surprising that older generations haven’t taken to autopay as readily as younger ones, but there’s a big discrepancy between those who have issues paying bills and those who don’t when it comes to the use of automatic payments. Those scraping by pay bills automatically just 26% of the time, while financially secure Americans use it almost exactly half the time (49.9%).
However, PYMNTS found that everyone is feeling the sting of bill increases as of late. Among those comfortable with their finances, 74% reported at least one bill increase, compared to 82% who were struggling.
When you add still stubbornly high inflationary increases on almost every other necessity expense to the mix, it’s no wonder that the typical American household is finding it hard to stay ahead.
Should You Be Using Autopay?
Avoiding late fees, having your bills paid on time and saving time and energy paying bills is smart planning. Given that payment history makes up 35% of your FICO calculation, reliable payments will keep your credit score strong too.
If you’re sure your account can handle any regularly scheduled withdrawal, then there is no harm leaving everything up to autopay. You should still check your accounts regularly for bills that fluctuate every month (mainly credit cards), membership or subscription changes and fraudulent activity.
However, there are some downsides to using autopay, depending on your financial situation and the expenses for which you’re using the service. “Sometimes set it and forget it can be a ticket to overspending,” Ted Rossman, senior credit card analyst at Bankrate, told CBS MoneyWatch.
“Sometimes hidden charges creep up, surcharges get added. or a fee goes up,” said Rossman. Unfortunately, automatic payment recipients don’t care about you paying a bill with mistakes on it or a triggered overdraft fee or NSF charge when you forget about a change in your balance.
If you are having trouble getting ahead or your income is unpredictable, at least try to pay the minimum monthly payment on your credit cards, which is an easy option offered by most issuers as a fail-safe.
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