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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

#71

Post by Sohcahtoa82 »

lolinder wrote: post #64
michaelmior wrote: post #43

Earlier quoted context omitted.

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.

But if you're going to check it every month anyway, why have the backstop be the minimum payment and not the full payment? You don't lose the right to dispute a charge just because autopay paid the statement off, and setting it to pay in full means you won't be charged any interest at all if you forget to check one month.

If I autopay the full amount before realizing there's a fraudulent $1,000 charge on my card, then I'm in for a surprise when an extra $1,000 is missing from my checkout account.

A pending fraudulent charge on my credit card isn't a problem. Cash missing from my bank account until the investigation is complete CAN be a problem.

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

#72

Post by HelloMcFly »

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…

> when I was using the old YNAB which required manually entering all purchases and manually reconciling your account.

I still use YNAB4 after their online YNAB solution's monthly cost got too high. I didn't do it at the time, but now I just import bank statements. It's not too bad, not quite as slick as the new (relatively, anyway) online YNAB. I still prefer to have this level of insight on my finances and spending though.

> I don't know if better tooling could help, pointing out subscriptions and things like that

I don't use it, but Rocket Money advertises this as one of their main features.

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

#73

Post by TheGeminon »

andrelaszlo wrote: post #62

I set up my (Swedish) CC bill to autopay the full amount each month. I only use it for emergencies though. It seems like it's really common elsewhere (the US) to use it for larger purchases. Isn't it very uneconomical? I recognize that I might be speaking from a position of relative financial privilege, but it doesn't seem limited to people in acute financial distress? Maybe it works differently too. I've read stuff…

North American credit cards can have very strong benefits (which merchants pay for in their fees) giving 1-5% back on purchases, and other deals/discounts/perks, so there is a lot more perceived value to using them and (intending) to pay it off in full.

But that also means it’s easy to just keep using the card, and many people don’t actually use the cards to their full extent to get the full perceived value either.

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

#75

Post by ms7m »

andrelaszlo wrote: post #62

I set up my (Swedish) CC bill to autopay the full amount each month. I only use it for emergencies though. It seems like it's really common elsewhere (the US) to use it for larger purchases. Isn't it very uneconomical? I recognize that I might be speaking from a position of relative financial privilege, but it doesn't seem limited to people in acute financial distress? Maybe it works differently too. I've read stuff…

The only economic benefit I see with credits are the rewards/protections it provides for everyday purchases. Here in the states, we don't have a cap on interchange rates for merchants. This trickles down into benefits (For example on my Amex card)

- 1 year extra warranty on top of my purchases, with return protection if the merchant

- Points / 'Cash Back' (much higher multiplier) that can be used to purchase airline tickets or gift cards

This is essentially free money and protections if you use the credit card and fully pay it off, but obviously, most Americans carry balances over and the interest charges basically negate any rewards.

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

#76

Post by 13of40 »

andrelaszlo wrote: post #62

I set up my (Swedish) CC bill to autopay the full amount each month. I only use it for emergencies though. It seems like it's really common elsewhere (the US) to use it for larger purchases. Isn't it very uneconomical? I recognize that I might be speaking from a position of relative financial privilege, but it doesn't seem limited to people in acute financial distress? Maybe it works differently too. I've read stuff…

In the US you typically get a kickback ranging from about 1% to 5% for different kinds of purchases. Costco, for example, sends you a check every year based on your purchases, so it makes sense to use your Costco card to pay for everything versus a debit card.

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

#77

Post by Golden_Wind123 »

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.

Most credit cards pull the auto-payment either on the due date or the day before, which means that you have ~1 month to check your statements and file disputes/disable autopay in the event of anything unusual.

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

#78

Post by LandR »

andrelaszlo wrote: post #62

I set up my (Swedish) CC bill to autopay the full amount each month. I only use it for emergencies though. It seems like it's really common elsewhere (the US) to use it for larger purchases. Isn't it very uneconomical? I recognize that I might be speaking from a position of relative financial privilege, but it doesn't seem limited to people in acute financial distress? Maybe it works differently too. I've read stuff…

I'm in the UK and have my cc setup to auto pay the full balance each month too. However I use my credit card for everything except my direct debits like mortgage, utilities etc.

Literally everything else is on credit card. I just get much more protection. It I buy on debit card then I need to get my money back (doesn't arrive, faulty etc) it's so much more of a hassle.

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

#79

Post by adamredwoods »

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?

Safety net in case it is forgotten. With children and life getting in the way, it is easy to forget some bills.

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

#80

Post by boc »

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.

This seems less efficient/more dangerous than simply asking for mailed statements and then auto-paying the full balance. They'll deliver you a physical statement in the mail for you to look through/digest, and you aren't risking missing a month and paying interest.
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