Is Autopay a good or bad thing?

[NoMoreE46]

This Wall Street Journal article is sponsored through MSN Money:

Autopay Is Making Us Worse at Managing Credit-Card Bills (msn.com) 

What are your thoughts?

Selected Excerpts:

The share of credit-card accounts enrolled in these automatic payments roughly doubled between 2015 and 2020 and continues to rise, according to data from the Consumer Financial Protection Bureau, or CFPB, and industry executives.

 Borrowers who use autopay pay off between 8% and 17% less of their monthly credit-card balances compared with customers who make manual payments, according to the study.

Customers who are on automatic payments pose half the risk of customers with similar credit who aren’t on autopay, said Max Axler, chief credit officer at Synchrony Financial, which services more than 70 million credit-card accounts.

Accounts that unenroll from autopay before their balance is paid in full or have multiple automatic payments returned for insufficient funds raise immediate red flags, said Axler.

“It’s not uncommon for that person to go delinquent,” he said.

While autopay enrollment has no direct impact on credit scores, being perceived as riskier by your bank could make it harder to get approved for more credit or lead to reduced credit limits, according to financial advisers.

At Capital Services, a credit-card company that manages the card portfolios for a number of regional banks, 0.3% of autopay plans are terminated every month for insufficient fee

[JoeRockhead]

I've personally just never trusted auto pay.  And after seeing so many people here and elsewhere get dinged with 30 day lates etc... due to one problem or another with their auto pay. The cherry on top is then the issuers throwing their hands up, basically saying 'sorry, not out problem we didnt receive your payment on time'.

Even with companies offering bonus points etc... to get it set up, I'm going to remain in the no auto pay for me camp.

[tparks5961]

Yeah, I have most of my account setup on auto pay, but I check them monthly anyway to make sure they went through.

Two months ago, somehow my truist card switched from My primary account to Wells fargo which I havent had for over a year.  The payment was returned and of course I didnt know it.

So during my routine check, I saw the late payment fee and resubmitted the payment.  Im not sure how the account was changed, but if I did not have the habit of checking all of my accounts bi weekly, I would have been screwed.   The payment was only 5 day late so didnt affect my credit. Do not leave your credit future to auto pay.. anything could happen. Take 3 minutes to look over your accounts at least twice a month.

[citymunky]

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@JoeRockhead wrote:

I've personally just never trusted auto pay.  And after seeing so many people here and elsewhere get dinged with 30 day lates etc... due to one problem or another with their auto pay. The cherry on top is then the issuers throwing their hands up, basically saying 'sorry, not out problem we didnt receive your payment on time'.

Even with companies offering bonus points etc... to get it set up, I'm going to remain in the no auto pay for me camp.

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Autopay has given me issues in the past, now I just avoid it. I'm in the no auto pay camp as well. 

[AndySoCal]

If I were to do auto pay I would set it up in bill pay as a reoccurring payment provided that I was going to not pay the balance in full each month on that card. Installment loans are better suited for that than a revolving account.

[Jeffster1]

Auto-pay is only a back-up for me. Several times each month, I do a sweep of all my accounts and PIF the balance. TBH, I can't remember the last time when a balance made it all the way to the due date, so I've never had to fall back on the auto-pay.

i find that endless Teams calls where that one person drones on forever...not saying anything...present me the perfect opportunity to check my accounts.

i don't trust auto-pay entirely myself, but I'm happy it's there. 

[SouthJamaica]

I'm with @Jeffster1 on this issue. I use autopay, but only as a backup; i'd like to know that if I got hit by a truck or something, the minimum payment would be made.

But I never rely on it.

[CreditCuriosity]

autopay is set up on min for all my accounts to make sure i don't accidentally forget it or forget an AF card.  I always try to check my accounts that I normally use monthly though.  AF cards I fear the most if I just got them for the bonus and havent cancelled them yet or forgetting about aka amex delta platinum, aa aviator card, delta gold, etc.  Small piece of mind on those cards

[Anonymalous]

I found the article fascinating as well, particularly the parts about how lenders look at people who unenroll from autopay as credit risks, and how those who use autopay end up paying off less of what they owe. Regarding the latter:

• Those who pick “pay in full” when they set up their automatic payments are more likely to change their settings within the first 10 months since this option is less affordable in the long term, her 2022 study for the National Bureau of Economic Research suggests. Those who pick “minimum payment” tend to keep that setting.

That's probably why autopay costs more, because people end up defaulting to minimum payments even when they can pay off in full, leading to more interest. I think the overall lesson is the one expressed by most posters in this thread: Always stay on top of your bills yourself, and don't rely on automation.

[Lou-natic]

Count me in the "autopay bit me in the butt" group too.  I don't trust it but I set it up "just in case" something should happen to me my credit isn't completely ruined for the next 7+ years.  I also pay my cards off weekly and my idea of "carrying a balance" is taking more than one week to pay off a card.  I've had bad credit in the past and it's not something I want to go through again.  Having bad credit is expensive and having good credit makes life much easier.  Call me paranoid but I'd rather be safe than sorry.