Downside to Automatic Payment

Ray Hennessey, editor of
One thing that has created more free time for many dads and moms is online bill payment. But while it frees users from writing checks and stuffing and stamping envelopes, some drawbacks have emerged. Ray Hennessey, editor of, discusses what those draw backs are.

The plus to using online bill payment is you don't have to write a bunch of checks and some places are actually charging you for writing a check. But when you do decide to use automatic bill payment, you have to be very careful.

Firstly, automatic bill payment is not always "automatic." "In some case you may put it in for the first of the month, but it may not process with the person you owe the money to for five or six days," Hennessey explains. And if you have a short grace period, you will be paying late charges. Set your payment for an earlier date.

Another drawback is fluctuating withdrawals. "Say you are paying your electric bill automatically, you don't know what that's going to be in a given month, and there can be a wide swing," says Hennessey. And when this happens, you could be left short on cash or not have enough to cover the bill. In instances like this, you might be better off paying your bills on a case by case basis online.

And finally, automatic payments are hard to cancel. If you have ever tried to change gyms, you know how difficult this can be. One person wrote in to explain how they had to go to the gym and sign a bunch of papers just to get them to stop automatically deducting their account. "Sometimes they are tough to get out of if you do change your providers," Hennessey says.

Again, always be mindful that identity theft is a concern and if you use automatic bill you do increase your risk. "It is a lot more safe and secure than it used to be, but every so often you hear these horror stories and I don't' want to be one of those with the account," warns Hennessey.

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by Jenn Eaker