How Does Credit Card Autopay Work?

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Keeping up with monthly bills from several different credit cards can be a headache. It can also be dangerous to your credit history if you occasionally forget when bills are due. If you want to make sure you never miss a credit card payment, consider setting up automatic payments. Credit card autopay can help you make payments with minimal effort, and it may positively affect your credit score since bills will automatically be paid on time.

What Is Autopay?

Autopay is a feature that some credit card issuers, lenders and service providers offer that lets you schedule automatic payments from a bank account to pay your bills. If you struggle to keep up with multiple bill due dates, autopay can work its magic by making on-time payments for you.

Credit card issuers or merchants that offer autopay usually let you set it up in your online account dashboard. The payment may be debited on the bill due date, or you may have the option to choose another payment date. Make sure to mark this date on your calendar and keep enough cash in your account to cover the bill.

If there isn't enough money in your bank account when the automatic payment processes, you could get hit with fees from the merchant and your bank. Also, exercise caution when giving your banking details to a company for autopay. Always double-check that a company is credible and trustworthy before authorizing it to debit payments from your account.

How to Set Up Autopay

Setting up autopay can take just a few minutes once your bank account and routing number are provided. Part of the process is choosing the payment amount you want to make each month. Here are the options you may have depending on your issuer's policy:

  • Pay the minimum due. Your payment is the amount of the minimum payment due.
  • Pay the full balance. Your payment will pay off the entire statement balance (which may be different from your current balance).
  • Pay a fixed amount. You choose a fixed payment each month. Be sure this amount is at least the minimum amount due (and ideally more) to avoid fees and keep your account in good standing.

If you want to make multiple payments each month, some credit card companies may let you split up the automatic payment into several installments. For example, for Citi credit cards, you may be able to set up bimonthly payments. So, if you want to autopay $100 per billing cycle, you could choose to pay in two $50 installments each month.

Keep in mind that autopayments may still go through even if you choose to make another separate payment for the month. Say you set up autopay to never miss a payment, but also plan to add an extra payment manually to pay off your balance each month. The automatic payment that you set up may still go through as scheduled. Check with your credit card issuer to find out how they treat automatic payments when additional payments are made. To stop scheduled payments, you'll have to cancel them.

How Does Autopay Affect Your Credit Score?

Accidentally forgetting to make credit card payments can wreak havoc on your credit since payment history has the most influence on your FICO® Scores . Using autopay for credit cards can help you establish stellar payment history with minimal effort since payments are made automatically and on time. If you already have a few late payments on your record, all isn't lost. Making on-time payments from now on using autopay could help improve your score over time.

Setting up autopay for other service provider accounts like utilities and cable could also be beneficial. Usually, these accounts don't show up on your credit report (unless the account is sent to collections). But, with Experian Boost , you can add on-time utility, phone and streaming service payments to your credit report. If you use autopay to establish a positive payment history with these companies and sign up for Experian Boost, those payments could also help increase your FICO® Score powered by Experian data.

The Bottom Line

Autopay is a free feature that many creditors and merchants offer to automatically debit bill payments from your bank account. Setting up credit card autopay could help you build credit since it will help you consistently make on-time payments. Keep in mind that you always need to have enough money in your account to cover the autopayments you establish.

If you want to improve your credit score, monitoring your credit regularly can help you make a plan. Experian credit monitoring is free and comes with score tracking and alerts so you can keep tabs on your score as it grows.

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