The pros and cons of automatic credit card bill pay

Automatic credit card payments are a popular feature that allow you to set up recurring payments for your credit card bills. This can save time and ensure you never miss a payment, potentially avoiding late fees and negative impacts to your credit score. However, automatic payments can also lead to unintended consequences if you're not careful.

One of the main benefits of automatic payments is the convenience. You can set it and forget it, knowing your credit card bill will be paid on time each month without having to remember to do it yourself. This is especially helpful for people who travel frequently, have busy schedules, or simply want to simplify their finances.

However, automatic payments can also lead to problems if your available credit card balance is insufficient when the payment is due. If you don't have enough money in your bank account to cover the automatic payment, you could overdraw your account and incur overdraft fees from your bank. This can happen if your spending fluctuates or if you forget to account for a large purchase.

Another potential issue is if you have multiple credit cards with automatic payments set up. If you're not carefully tracking your spending and balances, it's easy to accidentally overdraw your bank account by having too many automatic payments go through at once. This can be a headache to sort out with your bank and credit card issuers.

Some credit card issuers also allow you to set up automatic payments for a fixed amount, such as a percentage of your balance or a set dollar amount. While this can be helpful for budgeting, it's important to make sure the automatic payment is sufficient to cover at least the minimum payment due each month. If you don't, you could still incur a late payment fee and damage your credit score.

"Automatic payments are a double-edged sword," says financial expert Jane Smith. "They can save you time and hassle, but you have to be really diligent about managing your balances and cash flow. It's easy to get tripped up if you're not careful."

To avoid problems with automatic credit card payments, experts recommend:

• Carefully tracking your spending and balances to ensure you have enough money to cover automatic payments
• Setting up automatic payments for the full balance due each month, if possible, to avoid interest charges
• Checking your credit card statements regularly to catch any unauthorized charges or errors
• Considering setting up automatic payments for a fixed dollar amount rather than the full balance, to help with budgeting

Automatic credit card payments can be a convenient tool, but they require careful management to avoid potential pitfalls. By staying on top of your finances and setting up automatic payments thoughtfully, you can enjoy the benefits without the headaches.