Is there any downside to having bills automatically drafted from your bank account?

[raccoon]

I am thinking of having this done with my electricity bill.

Also, is it easy to undo this in case of sudden layoffs or something similar?

[Nye Bevan]

1. I've been doing this with my electric bill for a couple of years now

and have had no problems. I am very disciplined about making sure there is always enough money in the account. If there are insufficient funds you would probably get dinged with fees.

[JVS]

2. Yes. You no longer can decide which bill to pay and when. You're also more prone to being...

charged multiple times in error. I use automatic billing for phone and internet (because these bills are always the same size), but my electric and gas bill I open each month to see how much I'm using and decide if I want to pay the minimum or the full bill.

[hobbit709]

3. If you ever want to stop this, it won't be easy.

Everyone I know ended up having to close their account to stop the automatic payments.

I pay all my bills online but I don't give anyone automatic access to my bank account.

[ananda]

8. Same here.

I pay some bills online, but always month by month.

[Yavin4]

4. I Just Pay My Bills Online The First of the Month

I don't always trust the automatic drafts. It's in their interest to delay a draft and ding you with fees.

[dkf]

5. I pay everything I can automatically.

But always leave a significant cushion. I also have an overdraft agreement which I have never used, but gives me peace of mind.

[Jim__]

6. A friend of mine had his mortgage automatically deducted.

Then he refinanced. The old mortgage had a (illegal) clause in the contract that early payment carried a penalty. The old mortgage company emptied his bank account. All his outstanding checks bounced. Eventually he got his money back. But he had to pay the penalties on the bounced checks, he had to jump through hoops to get his money back, his credit rating took a heavy hit. I don't let anyone touch my bank account but me.

[PoliticAverse]

7. Yes, should the biller make an error your bank account can be drained.

This can cause other payments/checks to bounce and cost you time and money to undo.

I much prefer manually paying each month through the bank account, so that I am causing
the transfer rather than the billing company.

Having received a (paper) electric bill one month what was off by a huge amount
(someone must have made an error reading the electric meter or typing in the value
they read) I will not be allowing the electric company to automatically deduct money
from my bank account in the foreseeable future.

[pipi_k]

9. I've been doing it for some time...

I set up my accounts to automatically pay a set amount each month or quarter or year.

It works because the bill is always the same amount and I have a reminder program on my computer that lets me know I have to deduct those payments from my bank balance.

For anything with a variable payment amount, I do them manually, and the money can be deducted on the date I specify.

I do it all through a small local bank, and yes, it's easy to undo/change, but I don't know how easy it would be through a different bank.

[-..__...]

10. Perhaps.

For someone applying for a loan or credit card for the first time, it might affect their credit history.

Example... years go when I bought my very first car, I applied for a loan through my credit union and opted to have the payments automatically dedected
from my paycheck. Not a problem... it was convenient and eliminated the likelihood of my missing/forgetting to make a payment.

However (as I was told by the loan officer at the time), by going with that option, and if in the future I wanted to apply for another loan or build up my credit history, my car loan wouldn't count as the responsibility for making the payments wasn't mine.

[dipsydoodle]

11. No downside

at least not in the UK where áll direct debits mandates are fully protected lock, stock and barrel.

If a bank or company using the system made a mistake which they didn't immediately correct on demand they would lose all access to that system.

[Lasher]

12. It is easy to undo.

Procedures differ somewhat among companies, just as they do in the signup process. But in some cases it's as simple as signing onto a website and changing an option.

I have used automatic bill pay for all my utilities for years and I wouldn't dream of changing it. I still handle credit card bills the old way but I'm thinking about putting them on autopilot too.

[Obamanaut]

13. The only checks I've written in several months have been to the restaurant

we go to weekly. All of our bills are paid via draft, and have been for several years. We've not had any problems.

There are no credit card or personal loan bills, so that might have made it easier.

Two mortgages, electricity, gas, phone/internet, etc. Groceries and other shopping via debit card.

[seabeyond]

14. credit card is the only bill i pay. the rest go thru auto... i want to see the cr card bill. nt

[vroomvroom]

15. Make sure to check once in a while to ensure they are accurately charging.

There are way too many companies that make errors which always, always end up favoring them (they charge more than they should).
So i recommend every other month just to go over past charges to make sure they are accurate and match your bank debit.

Since it is a reoccurring thing like electric i dont see a problem with what you are doing.

[Uben]

16. I've done it for years

My only problem is I'm not sure how much and when it is deducted. It hasn't been a problem since I always keep at least $10K in checking, but if one lives check to check, like I did for 30 yrs, I can see it being a problem with overdrafts.

[JustABozoOnThisBus]

17. Another way to pay, if you have repeating bills

Your bank should be able to automatically schedule payments of fixed amounts to a recipient. This can make sense for mortgage payments, car loan (or lease) payments, etc. I don't know if it would work for variable payments, like utilities.

I do both, so I don't have to spend on postage (or remember to pay a recurring bill).

:hi:

[robcon]

18. I haven't found any downside.

I've changed/canceled payments many times.

Saves postage.

[marmar]

19. I do it with my Discover bill, and it's easy to stop or change if needed.

nt

[RebelOne]

20. Most of my bills are paid by

automatic withdrawal. I have done this for years with no problem. In case of a layoff, you will have to pay your electric bill anyway.

[handmade34]

21. I don't

I keep a close watch on bills and if I have to consciously pay a bill I will check closer and be mindful... too many mistakes are made

[Shagbark Hickory]

22. Many of the auto-debit programs warn you first and you see the statement before it sucks out the $$$

I use it for the electric bill only because the electric co doesn't take credit cards. But the rest of my auto-debit are on credit cards. I would suggest using credit cards if you can. As others have mentioned if you can't see the statement in time and there's an error, you're screwed.

And although many of these companies also use an outside service like mycheckfree, where it should be easy to turn off the automatic drafts, it can be harder to do it. Make sure there's plenty in the account.

[Skink]

23. car ins only

[TwilightGardener]

24. Our CU requires us to post the bill payment amount and date in advance, and then

it's supposed to take out the payment on the selected day. However, the credit union has at least once taken payments out before it was scheduled to happen--BEFORE our paycheck had been deposited. Luckily we had the funds, but it would really piss me off to have a BANK-CAUSED overdraft. Oops, on edit, I guess that's not "automatic withdrawal"--we do have that, too, with car/life insurance. Never had a problem with it. Still, you are giving up a measure of control, either way, when you aren't putting a check in an envelope.

[rucky]

25. depends on your cash flow.

If you always know you have money in your account to cover it, it's awesome.

[Bonhomme Richard]

26. I refuse to do it. When a Corporation says that something is good for me....

I automatically assume they mean it's good for them. I don't want to give control of my money to anyone.