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Autopay is making us worse at managing credit-card bills

wsj.com

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

#31

Post by crazygringo »

jawns wrote: post #3

The dark patterns around auto-pay are part of the problem. One that bit me a couple of times this year was my bank's offering the ability to set an auto-pay limit. Which you would think means "auto-pay the lesser of the account balance or the specified limit," to help smooth out payments for a larger purchase. But instead it means, "short-circuit auto-pay if the account balance rises above the limit." It's easy to mi…

That sounds like it has the makings of a class-action lawsuit that would win.

You can clearly demonstrate the exact customers harmed by it. You should see if you can find a law firm to take it on.

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

#32

Post by ghaff »

icedchai wrote: post #16
ricardou wrote: 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.)

I have more than that I can't autopay but I can go on my bank's site and just have them write a check to recurring payees.

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

#33

Post by WendyTheWillow »

JKCalhoun wrote: post #23
ricardou wrote: 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.

Agree. Autopay is an invisible gremlin reaching in and taking money from me every month. Nickelandimeism is apparently the new economy.

…except autopay isn’t invisible? Also what in the world does paying off a credit card monthly have to do with “nickelandimeism”? How you use the CC is a wholly separate from how you manage its payment.

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

#34

Post by Freedom2 »

Analemma_ wrote: post #7

One thing that has really helped me is that you can set up the Apple Card so that it sends a notification to your phone for _every single purchase_, whether one-off or recurring. Of course you can turn this off if it annoys you, but I have found it's good to leave it on: it makes CC purchases "hurt" like spending cash does, and occasionally reminds me of recurring costs I would otherwise have forgotten. Probably othe…

This is a standard feature for many banks with quality phone apps. It's also good for alerting you instantly if your card is compromised.

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

#35

Post by WendyTheWillow »

sxg wrote: post #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.

It’s also arguably innumerate, or at least financially unaware. The middle option is the optimal choice, as it gives you a free one-month loan from the bank. Interest doesn’t accrue until you’ve carried a balance over month to month.

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

#36

Post by ghaff »

damontal wrote: post #27
Dobbs wrote: post #2

Not terribly surprising. The time in my life that I was most on top of my finances was when I was using the old YNAB which required manually entering all purchases and manually reconciling your account. The effort put in to keep on top of it made me hyper aware of what I was spending and where. It was great, but it takes too much effort. I don't know if better tooling could help, pointing out subscriptions and things…

Too much effort? Takes me maybe 30 mins a week. Seems like very little effort in exchange for being on top of your finances.

30 minutes a week seems like a lot. (Admittedly the alternative of scanning your credit card bills and bank transactions is not zero but it's a lot less.)

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

#37

Post by sahila »

icedchai wrote: post #30
JKCalhoun wrote: post #24

Earlier quoted context omitted.

> You waste so much time It's time well spent — making sure I am paying for the things I really need/want.

I still look at the statements. Writing checks and mailing them out is pure drudgery.

Paying "manually" doesn't mean writing checks and mailing it out. You just log into your bank and click pay instead of have it paid automatically.

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

#38

Post by CydeWeys »

Rapzid wrote: post #19
crazygringo wrote: post #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…

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

Why though? Are you actually paying the full statement balance in time each month this way and this avoiding interest charges? If so, then by paying before the due date you're giving away money unnecessarily, especially with interest rates at 5% now.

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

#39

Post by michaelmior »

crazygringo wrote: post #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…

> 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…

That's not obvious to me. Just because someone can pay more than the minimum balance, doesn't mean that they do. I think that's one case where autopay could cause someone to run up unnecessary interest. A person may know that they can't pay the full bill, so they set up autopay to make sure they at least pay the minimum.

However, someone poor at managing their finances might have gone in to pay more than the minimum if autopay wasn't available. But since it's set to autopay, they might not bother to make any additional payments. This isn't necessarily caused by autopay, but you could argue that if autopay didn't exist, some fraction of people who are currently paying the minimum balance, might have paid down balances more quickly.

I don't hav any particular evidence to support this, but it seems plausible enough to me not to be dismissed out of hand.

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

#40

Post by ganoushoreilly »

Rapzid wrote: post #19
crazygringo wrote: post #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…

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

Same, it's a good fallback in case you forget to login and make that payment.
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