The Pros and Cons of Auto-Pay: Should You Set Up Automatic Credit Card Bill Payments?

If you own a credit card, you might know how important timely payments are. You miss the due date and be ready to pay an extra interest amount along with the total bill.

Around a month back, when I was initiating credit card bill payment online for the first time, I was completely overwhelmed by its feasibility. From your comfort zone, you can quickly pay your bill without even moving an inch.

What is Auto-Pay?

Credit card autopay is a service many credit card issuers offer that automatically makes your monthly payment when a statement is posted. Keep in mind that even with this feature that, you are still in control of how much to pay and when the payment is deducted.

Further, the automatically-paid amounts can be set to the minimum payment, a custom amount, or even the full statement balance. Paying the full amount is the only option that avoids accruing interest.

What are the pros and cons of Auto-Pay?

Setting up automatic credit card bill payments, also known as auto-pay, can have several pros and cons. Here are some of them::

Pros of Auto-Pay:

●     Convenient

This feature eliminates the need for manual bill payments every single month. Once it is set up, the credit card bill will be paid automatically, saving you a lot of time and effort.

●     Avoid late or delayed payments

With Auto-Pay, you can easily make sure that your bills are paid on time. Late payments can ultimately result in late fees, increased rate of interest, as well as damage to your credit score.

●     Credit score improvement

Consistently making timely credit card bill payment India definitely has a positive impact on your credit score. Remember that a good credit score is crucial for obtaining favorable loan terms, such as lower rate of interest.

Cons of Auto-Pay:

●     Insufficient funds

If by any chance you don’t have enough funds in your bank account when the auto—pay is processed, you may incur overdraft fees from your bank. Further, you might also incur late fees from the company.

●     Lack of awareness

With this feature, you might be less inclined to carefully review your credit card statements each month. This can ultimately result in missing billing errors or even unrecognized fees.

Which is the best application to pay credit card bill?

Here, I’d like to share my personal experience with you. I was suggested the Bajaj Finserv application by one of my colleagues. Believe me, this is one of the best applications for credit card bill payment and, for that matter, any kind of payment.

At first, I downloaded this app for my card payment, but now I depend on it for almost every other personal need. From paying bills to even investments, this app is a one-stop solution, therefore, it is highly recommended!

How do payments on a credit card work?

To understand this, you need to pay attention to the following five steps:

1. You purchase with your card.
2. The merchant sends the transaction details to your issuer.
3. The issuer authorizes the transaction and deducts the amount from your credit limit.
4. You receive a monthly statement showing your purchases, payments, and remaining balance.
5. You make a payment on your credit card by the due date.

Remember that if you cannot pay your entire balance by the due date, you’ll be charged interest on the remaining balance.