Whether you’re on vacation, working constantly, or just busy with life, it’s so easy to miss a payment. This may seem trivial at first, but after the fifth or sixth late fee, you might get fed up. Automatic payments can help manage your finances and avoid late fees by paying your bills on time. On the same principle, automatic savings can help you manage your funds for the future. If you have trouble saving, setting up automatic savings will save you money easily because the money is automatically set aside for you. While guaranteeing you money for the future and on-time payments, savings and automatic payments are a useful tool for moving towards a better financial future.
If your credit rating is low and you are rejected by the loans, it may be time for you to set up automatic payments. These are ideal and easy to implement. They can be beneficial for your financial needs, your credit rating, and your credit history. With all the expenses and deadlines, it can be difficult to pay each of our accounts on time. One way to help solve this problem is to set up automatic payments. Your bills will be continuously billed to your credit card or taken from your checking account each month, on a pre-established date. All of your monthly expenses will be paid automatically, without you having to do anything. By paying your bills on time, you will be assured of never missing a payment again and going towards a good credit score. The following information will provide you with the advantages and disadvantages of automatic payments
- On the practical side – By paying your bills automatically each month, you will not have the pressure to remember to pay on time
- Travel Rewards-By paying your credit card bills automatically, these can give you more points for traveling. The accumulation of all your bills, every month, can lead to hundreds of points, which is enough for a small trip.
- Improve your credit rating by paying your bills on time, your credit rating will improve. Your minimum amounts will be transferred automatically and you should not forget to make a payment. This will help you improve your credit rating.
- Respect for the environment-Automatic payments involves online transactions and the elimination of paper bills and checks. In addition, you will save money while no longer buying stamps.
- Save money-Paying your bills online means you no longer have to buy stamps, checks, envelopes, and gas to get to the post office.
- Less chance of stealing your identity-Making your transactions online means you no longer have to post personal information. This will lessen your chances of stealing your identity through the mail.
- Hidden Fees-Some companies will charge you a fee to make automatic payments. However, in reality, these automatic payments save businesses money. So, if that’s the case, do not pay any fees and pay your bill with a check.
- Losing track of your expenses-Since everything is paid online, it can be easy to forget what you paid and when. Keeping your monthly expense due dates on a schedule can help prevent unseen banking errors.
- Stop Payments-It’s very easy to start making automatic payments, but it can take a lot longer to stop them. If an online option is not available to remove automatic transfers, contact and inform your merchants or service providers at least 2 weeks in advance, before the next scheduled transfer.
- This can be done verbally, but some companies may request your request in writing. If you only want to stop some payments, not all, contact the payments companies that you want to stop, and they will inform you about their cancellation procedures.
- Overdraft fees- Even if the money is transferred online, you should always make sure there is enough money in your chequing account to cover automatic payments. If not, you will be charged expensive bank overdraft fees.
- Increasing a credit card balance-Although your bills are billed directly to your credit card, it is important to pay your credit card regularly. If not, you could be left with an expensive credit card debt, which could affect you for years. To prevent this, calculate how much has been paid automatically and send this amount to your credit card each month.
As you can see, there are positive and negative sides to the use of automatic payments. On the one hand, you will not have to remember to pay your bills. Whether you are on vacation in the Bahamas or taking care of a newborn baby, your bills will always be paid on time. On the other hand, automatic payments mean that you give access to your banking information, which makes you lose some control. It can be more risky and tempting for the companies you are dealing with to take advantage of and add “accidental” fees. If you do not always check your payment history, you could pay more than you should. For example, if you forget to cancel your gym membership, you may have to pay for a subscription you do not want.
In addition, variable rate invoices can be difficult to track because their amounts vary each month. If automatic payments are in place, you may be overloaded. If the amount is higher than you expected, you could end up with overdraft fees because you did not have enough money in your account to cover the amount. Thus, automatic payments may seem like a convenient and easy way to pay bills, but it can also be a trap.
Saving is like being on a diet. We all hate it, but we know you should do it. And when we do, we see a lot of positive results in the longer term. Just like dieting, saving can help you create a long and healthy financial history and help you achieve your financial goals. Saving is, however, difficult when you have a lot of different accounts and expenses to pay. On the other hand, if you set up automatic transfers, your money will be distributed over and over again in different accounts without you having to do anything.
There are two ways to do it. First, you can create an automatic transfer from your checking account to a savings and investment account at your local bank. You can also have a portion of your paycheck deposited directly into a retirement account or savings account. See the benefits of using an automatic savings transfer service.
- No effort – Once automatic transfers are created, there is no need to think about saving money. You will have a guaranteed amount saved each month.
- Spend less than you usually do – Creating this type of automatic savings involves letting your savings grow unattended (because they eventually accumulate over time). In addition, if you make your transfers right after receiving your paycheque, you will not accidentally spend all the money you are supposed to save.
- Save in separate accounts-Setting up automatic savings allows you to transfer your money to different accounts. Whether it’s a retirement fund, an emergency fund or just money for a vacation, automatic transfers allow you to contribute to each account each month. With a constant amount being put into each account, it is guaranteed that you will have enough money for emergencies, retirement, and vacations. It may take longer because of the number of open accounts, but it will be easier. You will not forget to transfer money to an account and do not lose sight of your goals.
As you can see, there are no disadvantages to making automatic savings transfers. This is the most effective way to save your money. This will greatly increase your savings and help you reach your financial goals. With this way, you are guaranteed to have enough money saved for all kinds of amazing experiences you want to accomplish during your life.
To determine which, if not both, apply to your finances, look carefully at your expenses, your income, and your budget. It depends on your financial situation and how you manage your finances. We strongly suggest that you implement automatic savings, but not always automatic payments. Saving automatically is always a good idea, but automatic payments can cause financial problems if they are not handled properly.