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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

#41

Post by rqtwteye »

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 think the problem is the term "minimum payment". A lot of people don't seem to understand that this is a basically arbitrary number. They will make them same mistake without autopay.

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

#42

Post by icedchai »

sahila wrote: post #37
icedchai wrote: post #30

Earlier quoted context omitted.

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.

It's still "manual" work. Why bother? Set it and forget it.

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

#43

Post by michaelmior »

CydeWeys wrote: post #38
Rapzid wrote: post #19

Earlier quoted context omitted.

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.

Not the OP, but the most likely reason I can think of is manual payments give an opportunity to review all charges. But still having the minimum set to autopay ensures that if you forget or unable to, the consequences are less severe.

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

#44

Post by marssaxman »

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 use the same practice. When I tried autopay, years ago, I felt like I never really knew how much money I had; it was like simultaneously balancing a checkbook backwards and forwards in time. Now I do it manually, paying off all current bills every time I get a paycheck, and that is much easier to understand.

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

#45

Post by rqtwteye »

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 would you do that?

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

#46

Post by AniseAbyss »

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.

[dead]

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

#47

Post by michaelmior »

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…

I've only started using YNAB the past few years, any bank that has a Plaid connection can be automatically imported into YNAB. They still recommend period manual reconciliation to catch any import errors (which I have seen, but rarely).

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

#48

Post by delecti »

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…

I second this suggestion. My first card with CapitalOne back in the day also had this on by default (though naturally required the app), and I've made sure to go out of my way to turn it on with subsequent cards as well.

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

#49

Post by michaelmior »

Personally I turn on autopay for anything whenever possible. (Fortunately, my financial situation has always allowed me to avoid carrying a balance on any credit card.)

I then use YNAB which automatically imports most of my transactions to review my spending every week. That still gives me the opportunity to dispute any incorrect transactions.

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

#50

Post by cratermoon »

ccooffee wrote: post #25

Archive: https://archive.ph/20231008050640/https://www.wsj.com/person... Cited research: https://kenaninstitute.unc.edu/wealthinequality/wp-content/u... From the research paper, it seems that this conclusion is based on less creditworthy cardholders. > The credit card products offered by the fintech company range from $500 to $10,000 in credit limit and 10% to 30% APR, and are generally targeted toward consumers with…

> this conclusion is based on less creditworthy cardholders.

Who are exactly the target of most of the abuse in the credit industry.

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