Automatic Bill Payments and Your Credit Score
Most of us are always on the lookout for ways to cut the amount of time we spend on mundane chores. One of the ways online banking has helped free up our time is through the advent of automatic bill pay. You can set up automatic payment plans for utility, entertainment, household, and other bills. In fact, almost any vendor you purchase goods or services from now offers automatic bill payments plans.
With an automatic payment plan, the monthly bill is recurrently charged to your credit card or debited from your checking account on a pre-set date every month without you having to do a thing. All my monthly bills, from my AT&T cell phone bill to my car payment to my Netflix account, are all charged automatically to my Amtrak rewards credit card.
It makes life easier knowing that bills are paid on time and in full each month. But while there are definite advantages to signing up for automatic payment plans, there are drawbacks as well. Thoroughly consider the pros and cons and how they could affect your lifestyle before signing up.
Advantages
Automatic payment plans have grown in popularity over the years as a result of many of the conveniences and advantages they offer.
- Convenience. By setting all your bills to be paid automatically, you’re not as pressured to keep track of what needs to be paid when or paying them on time. Once an automatic payment plan is established, your bank or credit card will handle the rest.
- Rewards. The biggest reason I charge my monthly bills to my travel rewards credit card is to get reward points for travel. All those bills add up to hundreds of points each month that are credited to my Amtrak Rewards account. This means I get at least one free cross-country trip each year. Why not use your bills to help you earn free travel, rewards, or even cash back?
- Environmental Issues. By eliminating paper bills and check writing, you reduce your impact on the environment. Not only do you save paper and trees, but you eliminate the carbon footprint left by snail mail. Plus, you don’t have to buy and keep on-hand a constant supply of stamps.
- Helps Your Credit Score. When your bills are set up to be automatically paid, you should rarely miss a payment or be delinquent. These are two things that can majorly hurt your credit score. In fact, when credit scoring agencies see that your bills are always paid on time, it helps your credit score by keeping it high or boosting it to a higher bracket.