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Autopay is making us worse at managing credit-card bills

wsj.com

11–20 of 145 posts

Re: Autopay is making us worse at managing credit-card bills

#11
The headline is not supported by the article. The actual truth of the article comes in the middle:

> Borrowers who use autopay pay off between 8% and 17% less of their monthly credit-card balances compared with customers who make manual payments, according to the study... When credit-card customers sign up for autopay, they typically have three options for monthly payments: the required minimum, the statement balance in full or a custom amount. Most people who enroll in autopay choose either the minimum payment or full balance, said Wang.

In other words, if you're already in the financial position to set it to full balance, then you're doing great, and autopay isn't making you worse at anything.

While if you set it to minimum payment, your financial position is obviously not great, and you're paying more in interest. But there's no evidence autopay is the cause here. Your lack of money is the cause.

If you're somewhere in the middle where you can pay more than the minimum but not the full balance, obviously you're not using autopay, because the amount probably changes each month based on what's left over from your other expenses.

The idea that autopay is the cause of not paying your bills is absurd. Causality runs in the other direction -- people who are already among the worst-off and can only afford the minimum, turn on autopay. (As well as those who can afford the full balance, of course.)

Re: Autopay is making us worse at managing credit-card bills

#12
post #6

I don't know what it is, but autopay causes me so much mental load. Instead I go over my bills every two weeks, following the tune of my paycheck. Every two weeks I check all credit cards, pay my mortgage, utilities, etc.

This is what I do as well, I opened a second checking account so half of my monthly bills is auto deposited from each paycheck and I set all my bills to be at the end of the month so I can make sure everything is smoothly going through. I even have a Google sheet where I keep track of balances weekly and what bills are coming up like the yearly Amazon or something

Re: Autopay is making us worse at managing credit-card bills

#13
"Most people who enroll in autopay choose either the minimum payment or full balance, said Wang."

This is the problem. You should always be able to comfortably make the full payment if you manage your budget proactively—I highly recommend YNAB for this. If you can't proactively manage your budget, you should be using a debit card.

Re: Autopay is making us worse at managing credit-card bills

#14
post #6

I don't know what it is, but autopay causes me so much mental load. Instead I go over my bills every two weeks, following the tune of my paycheck. Every two weeks I check all credit cards, pay my mortgage, utilities, etc.

Especially when I was doing a lot of traveling, I pretty much switched everything I could to auto-pay. I always found the weekly or biweekly bill paying something of a drudgery. I still periodically look through stuff but it's pretty rare I find a problem I need to deal with (and that's usually something like a charge from some payment processor I just didn't recognize).

Re: Autopay is making us worse at managing credit-card bills

#16
post #6

I don't know what it is, but autopay causes me so much mental load. Instead I go over my bills every two weeks, following the tune of my paycheck. Every two weeks I check all credit cards, pay my mortgage, utilities, etc.

I haven't paid bills "manually" in almost 15+ years. You waste so much time opening mail, writing checks, buying stamps, etc. I put everything on auto-pay, with the exception of property taxes (only because the city won't allow it.)

Re: Autopay is making us worse at managing credit-card bills

#17
This article seems a little fearmongering. Autopay is great, and several credit card companies offer a variety of nice features to help reduce the likelihood of temporary cash flow management issues. Citi for example allows you to split your payment in 2, so if you are paid biweekly, you can arrange your payment dates to align with your paydays.

Re: Autopay is making us worse at managing credit-card bills

#19

The headline is not supported by the article. The actual truth of the article comes in the middle: > Borrowers who use autopay pay off between 8% and 17% less of their monthly credit-card balances compared with customers who make manual payments, according to the study... When credit-card customers sign up for autopay, they typically have three options for monthly payments: the required minimum, the statement balance…

I auto-pay with minimal and log in at the beginning of every month and pay the full balances.
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