I am considering setting up all my bills online to automatically charge to my credit card each month, but I am not totally sold on the idea yet.
I track, log, and file my expenses regularly, and I try to be mindful of how and where I share my information. For example, I only use one credit card to make online purchase (which is not often), but never my other card.
When electronic banking was in its infancy, I remember hearing horror stories from people who had bad experiences with automatic drafts from their checking account, such as being hit with a bill at the wrong time or out of sequence with their paychecks, or being charged twice from institutions, etc.
Although I do online banking now, nothing is set up to automatically charge or deduct to or from any account. No money gets transferred until I say so, and I prefer to have that kind of control. But the autopay option linked to a credit card certainly seems convenient, and the benefits seem straight forward. However, the problems could be myriad, so I am wondering if anyone has had any experiences or "lessons learned" that they'd care to share.
Also, I've heard it mentioned that people will use PayPal to manage their online charges instead. I don't have a PayPal account, but does anyone have any experience with that?
I'm with Native Son. It's mostly been good experiences. I pay everything I can automatically - mostly by credit card, which is then set up to be paid automatically from my checking account.
Problems that have come up:
AT&T does a small test-charge to your credit card when you set up auto-pay. I had ISP problems as I was doing this and couldn't tell if the transaction had gone through. When the dust cleared, there were 3 $5 charges from AT&T on my credit card statement online. In reporting the issue to the credit card company online, there wasn't an option to just dispute the charge. My complaint was processed as a fraud, meaning they sent me a new card.
While my 2 Barclays rewards cards are paid automatically from my checking account, and my BofA Visa, for some reason, I could never set up my BofA AmEx to be paid off automatically each month from my BofA checking account. I could set up a certain amount to be paid each month, but not the balance. Consequently, I don't use that card. It's not worth the hassle.
I'm still undecided about what I want to do.
I'm very rarely home, and even have less and less access to banks and mail. I use auto bill pay through my bank, USAA. What they do is cut a check to the company that I owe, and mail it out. The checks are scanned along the way (even at times you can preview the scanned image at each location it is scanned), and are guaranteed against fraud. I've never once had a problem with them, and can cancel it at any time and resume payments manually. I keep somewhat of a meticulous budget and finance management spreadsheet, and keeping on an eye through online banking has never steered me wrong.
My advice, try one or two bills out that can you can afford to cover in cash in the worst case. Give it a trial run of a couple of months to see how it works for you. Once you test the waters and find the kinks in the system. See if it works for you.
Here is my advice as a banker:
Do not set up anything to clear directly from you checking acocunt, wheather as an ACH or through your debit card. If the information gets the wrong hands, or if a mistake is made the fundsare cleared and the only way to get it back is by refund from the merchant or by filing a dispute with your financial institution, which could take days, weeks or months, and in the meantime you are out the funds, and possibly even negative in your account.
Your best bet is to use your credit card. Thay way your account is never in jeopardy, and if a mistake is made, or in case of fraudulent activity you deal with the credit card company. This could also take some time, but at least your liquid funds are not affected.
But what about paying the credit card?
I solve such anxieties (and they're mere anxieties - I've never had an actual problem) by keeping a whole month's expenses in my checking account at all times. This is mostly so if I'm hospitalized, my finances get only minimally messy. As I prepare to leave the country for 2 weeks, it's nice to know all bills will be paid while I'm gone, too.
And I keep several months' expenses in a savings account, ready to be deposited into my checking account while banking errors are resolved.
If your credit card is serviced by your financial institution, which is what I suggest, then you should have no problem having the monthly payments come directly from your account, as the likelyhood of fraud being commited by your bank or credit union is slim-to-none.
If you credit card is serviced by a third party, or by the credit card company itself, then you may not have any other option outside of monthly check payments but to pay through your account.
I'll never say never, but I will say that I rarely see mistakes made when automatic payments are taken by a major credit card company.