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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

#51

Post by lazide »

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…

Or, that autopay allows people to not look at the credit card bill (or directly pay it) psychologically allowing people to ignore it easier and spend more than they’re making?

Which isn’t really an autopay issue, so much as an ‘enabled by autopay’ issue.

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

#52

Post by d3vmax »

Indian Govt. forced the companies to create an e-mandate. At start it was chaos, but I think overall there have been savings. From the article: https://support.google.com/pay/india/answer/11040246?hl=en

"Due to Reserve Bank of India (RBI) regulations, automatic payments in India will be limited to ₹5,000 INR ($60) per transaction. The e-mandate notification also requires Google to set up an e-mandate for your card. This affects all users, but there are some differences depending on whether you're a new customer or an existing user."

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

#53

Post by matwood »

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…

> not in the interest of other CC providers for you to be noisily reminded every time you spend money

All the big CC apps I use do exactly this. For big purchases some will send a notification to approve it in app on the fly. And yes, the alerts are very useful.

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

#54

Post by lazide »

rqtwteye wrote: post #45
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 would you do that?

So they psychologically notice and feel the amount spent perhaps?

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

#55

Post by actionfromafar »

d3vmax wrote: post #52

Indian Govt. forced the companies to create an e-mandate. At start it was chaos, but I think overall there have been savings. From the article: https://support.google.com/pay/india/answer/11040246?hl=en "Due to Reserve Bank of India (RBI) regulations, automatic payments in India will be limited to ₹5,000 INR ($60) per transaction. The e-mandate notification also requires Google to set up an e-mandate for your card. T…

Isn’t this about something different from paying off your credit card debt every month?

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

#56

Post by lazide »

cratermoon wrote: post #50
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.

Most industries frankly.

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

#57

Post by Rapzid »

michaelmior wrote: post #43
CydeWeys wrote: post #38

Earlier quoted context omitted.

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.

Yes this is exactly it.

I like to review stuff and typically don't keep a large cash balance. An expensive month could 5x or more my spend; maybe I just paid for an overseas vacation, my home owners and auto insurance is hitting, and whatever all in the same month. Want to make sure everything is in place before kicking off the payments.

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

#58

Post by lazide »

WendyTheWillow wrote: post #33
JKCalhoun wrote: post #23

Earlier quoted context omitted.

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.

It’s invisible in the sense that it requires no action on one’s part for funds to be transferred. Which enables (in many ways) nickel and dimeism, as it disconnects the original spending (nickels and dimes, often) from the actual withdrawal of funds from accounts.

You’d just see the overall bill slowly creep up with no clear cause. Frog boiling.

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

#59

Post by alexfoo »

michaelmior wrote: post #43
CydeWeys wrote: post #38

Earlier quoted context omitted.

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.

I do as the GP, autopay the minimum to avoid fines (not just interest) but then go in and pay the remaining balance before the end of the month.

Autopaying the full amount would work 95% of the time, except when I put something like a big holiday on my card and autopay pays the entire balance and the payment either fails because I forgot to have sufficient funds in my debit/checking account, or leaves me with very little whilst I wait for the money that was going to come in to pay for it.

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

#60

Post by lazide »

ghaff wrote: post #14
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.

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).

Which it does definitely remove a lot of the work. Which removes a lot of the incentive to pay fewer things (requiring such work), and removes a lot of the visibility towards exactly what is being paid (and trends, etc.).
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