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Just as death and taxes are certain, so are bills. Some companies make sure of it by requiring automatic payments without any extra benefit (think gym memberships or streaming services).
Other companies are less strict and make automatic payments optional, allowing manual bill payments for customers who still prefer it. Even better, some of these companies offer discounts to incentivize customers to pay automatically. Sadly, you won't find autopay discounts on your credit card bill, but here are six common types of bills where you can often save money by switching to autopay.
6 Bills That Offer Autopay Discounts
If you're still paying bills one by one, switching to automatic payments can streamline your personal finances while saving you money. Just be aware that some companies allow autopay discounts when paid from a bank account, debit card or credit card, but not for credit card payments. Some major phone carriers made this shift recently, so check the terms to understand what's required for autopay discounts.
Here are six common types of bills where you can often find autopay savings:
1. Cellphone Service
Major mobile phone companies, such as Verizon, T-Mobile and AT&T offer autopay discounts for customers who opt in. Savings range from $5 to $10 per line, per month depending on payment method, though you typically must also sign up for paperless billing to get the savings.
2. Internet/Cable TV
One of the most common places to find autopay discounts is with internet and cable TV companies. These service providers also typically give customers $5 to $10 off their bill each month for being on autopay.
3. Insurance Premiums
Some car insurance companies offer reduced premiums if you pay them upfront annually. If you choose to pay quarterly or monthly, depending on what your insurer allows, you can often get a discount for setting up autopay. For example, USAA knocks off up to 3% of auto insurance premiums for using autopay.
You might also be able to find autopay discounts for home insurance, renters insurance and life insurance.
4. Student Loans
It's typical for both federal and private student loans to have autopay discounts. Rather than giving you a flat amount off, automatic payments on student loans typically reduce your interest rate. Expect to enjoy a discount of 0.25% for enrolling.
5. Car Loans
If you have an auto loan, switching from manual payments to autopay can make a dent in your balance faster. Several banks offer 0.25% off auto loan interest rates for enrolling in automatic payments. Just read the fine print; one example required the autopay to come from a checking or savings account at that same bank.
6. Other Loans
While lenders usually always offer an automatic payment option, not all offer a discount for it, particularly mortgages. However, you might find autopay discounts on other forms of borrowing, such as personal loans or home equity lines of credit.
Check for Other Opportunities
You may find other autopay discounts for products, services and companies you pay for regularly. For example, if you use a day care for your kids, or doggie day care for your fur baby, you might find an autopay discount is available for regulars. Do a little research on your recurring bills to make sure you're not missing out on any savings.
Benefits of Setting Up Autopay
If you have bills with optional autopay, switching to it can benefit you in a surprising number of ways, even if there's not a discount:
- Pay less: When switching to autopay is incentivized, you get a discount on your bill amount or interest rate, which can add up.
- Avoid fees: Autopay ensures you'll never pay a late fee since your bill will automatically be paid on time, every time. No more forgetting a bill due date and making late payments.
- Help build credit: On that note, one of the most important factors in your credit score is your payment history. Since autopay simplifies on-time payments every month, you're not just avoiding fees, but helping build or improve your credit.
- Save time: Time is money, and having autopay means less time sitting down to check your bills' due dates and make manual payments. It's all conveniently taken care of for you.
How to Manage Bill Autopay
Autopay clearly has its perks, but there can be downsides if you're not strategic. Use these tactics to make sure automatic payments help you rather than hurt you.
1. Work It Into Your Budget
One possible challenge is that your automatic payments will likely draw at all different times throughout the month. This can create a budgeting nightmare if you don't keep track of what charges when, especially if it's not timed well with your paycheck and you might not have enough in your checking account to cover it.
Autopay can also be tricky for budgeting if you have bills that fluctuate monthly, such as energy bills. For bills with significant fluctuations, where it feels risky to have that amount pulled automatically, perhaps keep that bill one you pay manually.
You can also try to adjust the billing's timing to accommodate your budget. When you sign up for autopay, you might be asked to select your monthly bill date, and sometimes you can adjust it later. Depending on your situation, it could be easier to sync them up so they all bill at the same time, or spread out throughout the month.
2. Keep Track of Balances
When companies bill you through autopay, they can't see your balances, so the transaction initiates whether you actually have enough money in your bank account or not. This isn't an issue for credit card payments, but as we noted, some autopay programs don't permit credit cards.
If you don't have enough money in your bank account when autopay processes, you'll overdraw your account and likely get hit with a fee from your bank. You might also face fees from the service provider for returned payment, and if a bill goes unpaid for a while, it could damage your credit or cause you to lose service from that provider. Consider creating recurring calendar reminders that notify you a day or two before your autopay runs so you can double check that your balance is sufficient.
3. Update New Card Info ASAP
If you've ever received a new credit or debit card in the mail, you know the headache of updating payment info on all your accounts. But if you have autopay set up, it's especially vital to update your payment details immediately so the company doesn't bill your old account and charge a returned payment or late payment fee.
Go through your latest statements to refresh your memory about which businesses charge you automatically so you can update them all right away.
4. Do It Yourself
Getting a discount for using autopay is ideal, but even if savings isn't offered, consider switching to autopay anyway for its assistance with money management. If a company you pay regularly doesn't offer automatic payments, many banks and credit unions have free bill pay services that let customers set up automatic payments. Find out if any of your accounts have this feature, so you can still get some of the same benefits by doing it your way.
The Bottom Line
Switching to autopay can be an easy way to save a few bucks on your bills each month. But don't discount the benefits of using autopay even if no savings are offered. It helps keep you paying all of your bills on time every month, which, more than anything, could help strengthen your credit score. If you have a history of late or missed payments, it's a great time to start monitoring your credit for free on Experian. As you switch your bills over to autopay and build a strong repayment history, you could see your credit score rise in return.