Issue #126: No thoughts, head empty, bills on autopay

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January 12, 2022 • Issue #126

Hi y’all —

When Ciara sang about being automatic, supersonic, hypnotic and funky fresh, she probably was talking about me.

I’m a pro at doing things automatically. I’m not talking about putting on my blinker whenever I make a turn — more like how, if someone mentions Gilmore Girls, I will automatically launch into a speech about why Rory sucks. If Machine Gun Kelly releases a pop punk song, I will automatically stream it. And if I come across a 7-Eleven, I will automatically get a Coke Slurpee. No questions asked.

It's ironic, then, that I don’t pay all my bills automatically. Don’t get me wrong — I do pay them every month. I just don’t always take advantage of the autopay option that AT&T/Amazon/whoever tries to push on me. I manually move the money over.

But in the spirit of Ciara, I feel like I should take advantage of the technology available to me. I decided to find out: Is it a good idea to put my bills on autopay?

According to JR George, vice president of Trustco Bank, the reason companies love autopay so much is simple. Not only is it more efficient than having to process paper check payments, but it also helps them get their money quicker.

Think of it this way. If a bill is due on the 15th but you have until the 30th to pay it, most autopay services will take care of it on the 15th. Humans, on the other hand, are more likely to procrastinate, waiting closer to the deadline.

Because companies want that cash ASAP, they’re often willing to offer deals and discounts to people who put their bills on autopay. For instance, certain Verizon customers can get $10 off every month if they opt in to automatic bill payments. Borrowers who sign up for automatic student loan payments can usually shave 0.25% off their interest rate, which adds up to a significant sum over time.

It’s not just about perks, though. There are also other legit reasons George thinks it’s “a good idea for everyone” who can to consider autopay.

“It forces that financial discipline, or financial management, if you will, where people get into a routine where those bills are being paid,” he says.

Payment history makes up about 35% of my credit score, so having a record of on-time payments can help boost my standing. While not all bill payments are reported to all three major credit bureaus, it’s crucial to develop that pattern because credit scores are so widely used by lenders to measure how risky I’d be as a borrower.

On that note, autopay can also help me avoid late fees. That can translate into big savings, as research shows the average credit card late fee is around $36 and the typical U.S. household racks up $132 in late fees a year.

Perhaps the biggest “pro” of autopay, though, is that it outsources a menial task.

“Paying a bill is pretty simple, pretty mindless. It doesn’t take a whole lot of skill or thought, [but it] eats up your time,” says Ben Reid, general manager of M1 Spend. “Autopay — and automation, more broadly — can redirect [that time] toward higher-gain pursuits.”

For example, I can use the time I’d normally spend paying bills to research new investment opportunities or savings strategies.

The trouble comes when I get lazy. 

Like, say I set up autopay, and I forget about it. One month, I don’t have enough money in my account to cover my bill, so when the payment comes out I get charged an overdraft fee. Now the system (and my inattention) has actually COST me money. 

Jerry Zeigler, a financial coach with SaverLife, says the optimal time to schedule my automatic withdrawal is for one or two days after payday. That leaves enough time for my paycheck to clear and ensures that my balance is high enough to cover my bills.

Even so, I need to keep closely checking my credit card statements. If I forget, I could miss fraudulent charges, fees for subscriptions I forgot I had or unnecessary expenditures. Or worse, if autopay only withdraws the minimum payment owed, I could end up in debt without realizing it.

Basically, by using autopay, I’m depriving myself of that moment where I’m confronted with black-and-white evidence that I ordered UberEats 10 times in a month… and the subsequent wakeup call.

“You go along with life thinking everything is rainbows and unicorns, but you didn't even look at the statement,” George says. “If you get complacent, it can take a toll.”

THE BOTTOM LINE

(but please don't tell me you scrolled past all of my hard work)

Putting my bills on autopay can be an easy way to ensure I’m making on-time payments, to increase my credit score and to get perks from retailers. I can avoid late fees and redirect that energy toward more profitable pursuits, to boot.

But I should be careful not to use autopay as a crutch.

“The purpose of automation is not to completely disengage from the world,” Reid says. “Overreliance can have you take your eye off the ball — or make a misstep.”

RECEIPT OF THE WEEK

check out this wild celebrity purchase

VIA INSTAGRAM

Entrepreneur Mark Cuban recently bought an entire abandoned town in Texas. The asking price for the 76.8-acre city of Mustang was originally around $4 million, but the owner had trouble selling it. That’s when Cuban got involved. It’s unclear how much he paid, but he told NBC News he purchased Mustang “to help out a friend.” Guess it makes sense — Cuban is a maverick, after all.

INTERNET GOLD

five things I'm loving online right now

1	I absolutely adored this Romper piece about parents who are secretly obsessed with their kids’ Jellycat stuffed animals. It’s cute on its own, but it also introduced me to the amazing Jellycat Reviews Twitter account, which features excellent critiques like “he is cheaper than therapy. I mean look at him he's only a little guyyy,” “i cry when i look at him he’s so polite” and “this dude is literally a huge marshmallow.”
2	Did you know the largest snowperson ever made was only a few feet shorter than the Statue of Liberty? Olympia, constructed by residents of Bethel, Maine, in 2008, also had eyelashes made of skis and lips made of tires. See video here.
3	Can’t stop thinking about these cats.
4	Have you guys been playing Wordle, the daily online puzzle where you have to guess a word in six tries? It’s a fun way to spend a five-minute break from work that is not scrolling through TikTok on your phone. Your brain cells will thank you.
5	I’m not a soup person, but every so often I get so cold that I acquiesce and make a batch. Last week, my recipe of choice was this copycat version of Olive Garden’s Zuppa Toscana. I recommend swapping in spinach for kale, adding red pepper flakes and topping with a TON of shredded Parmesan. Yum.

401(K)ITTY CONTRIBUTION

send me cute pictures of your pets, please

VIA BARBARA BROCKWAY

Meet Piper, a gorgeous feline who’s keeping a close eye on her bills even though she has pawto-pay.

Time to do the 1, 2 step.

See you next week.
 

 
P.S. Wow, you guys LOVE Buy Nothing! After last week's issue, Scholar Lindsay emailed me to say she frequently checks in on her local group, where items like happy birthday decorations, power tools and shoes are always up for grabs. Scholar Robin told me about the time her fridge broke, so she posted about it on Buy Nothing and the community helpfully provided ice coolers to save her food.

P.P.S. Are your bills on autopay? Do you have any good soup recipes? Would you move to Mark Cuban’s city? HMU at julia.glum@money.com or tweeting @SuperJulia on Twitter. Wishing you all 🟩 🟩 🟩 🟩 🟩 .

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