Auto-Pay Pros and Cons

Dear Dr. Per Cap:

I have all of my bills set to auto-pay.  I also use auto-pay for monthly subscriptions for streaming apps and razor blades, but my money wise girlfriend tells me auto-pay is a bad habit.  Is that true?


Auto-Pay Ray

Dear Ray

I get it.  Auto-pay is handy technology that enables consumers to pay bills on time with automatic withdrawals from a bank account, mobile payment app, or digital wallet.  But I understand your girlfriend’s concern because out of sight, out of mind isn’t always the best practice when managing money.

And there lays the good and the bad with auto-pay.

Auto-pay can certainly save time, effort, and even money if you’re someone who still mails payments like me.  Hey I admit – I like writing checks and I’m a sucker for Scooby-Doo stamps.  However, managing money is not a spectator sport and what might feel like a hassle, repeatedly dealing with bills and transactions, is actually a great way to keep finances on track.

Unfortunately, people who rely on auto-pay run the risk of completely ceasing to pay attention to their bills.  The hands off approach can sometimes prevent them from seeing the big financial picture and taking action.  Here are some examples.

  • Electricity bill is significantly higher in June than last year? Maybe the AC needs servicing or the thermostat is set too low.
  • Water bill keeps creeping up two months in a row? There could be a leak somewhere.
  • What about that free one month trial to Cheese of the Month Club? Yeah, nobody noticed that high end cheddar the last time you made Indian tacos so cancel the subscription before monthly auto-payments kick in.

Many people today have so many auto and digital payments draining money from their accounts they can’t keep track and it ends up costing them more in the long run.  Here are a few tips to avoid being that person who flies exclusively on autopilot finance only to find it’s a bumpy ride.

  • Set up text alerts from your bank to notify you when auto-payments are made. This will remind you when, where, and how much of your money is leaving your accounts.
  • Limit the number of auto-pay providers you use. Pick one, such as a bank account or a single payment app, and use it for all of your auto-pays.
  • Pay attention to subscriptions that automatically renew and their costs. Many subscriptions, like my daily newspaper, reel you in for a low teaser rate for the first twelve months.  After that the subscription automatically renews every month and the rate can increase too.

And lastly – hang on to your money wise girlfriend.  She sounds like a keeper!

Ask Dr. Per Cap is a program funded by First Nations Development Institute with assistance from the FINRA Investor Education Foundation. This content does not constitute professional and/or financial advice, and Dr. Per Cap is not a licensed investment advisor. To send a question to Dr. Per Cap, email