What Is Automatic Bill Pay?

Automatic bill pay is a service that automatically sends out payments for recurring bills every month. Typically, you sign up for the service online through your bank or credit union’s website Then, you add your list of payees, providing their names, your account numbers and other information. Once your payee list is complete, you can set up one-time or recurring payments, select payment amounts and schedule payment dates with just a few clicks.

Most payments made with automatic bill pay services will be an electronic debit from your account. However, if your payee doesn’t accept electronic payments, your bank or credit union may send them a paper check.

Benefits of Automatic Bill Pay for Seniors

For seniors, automatic bill pay offers several advantages, including the following.

Avoid Late Fees

If you forget to make a payment or your check arrives late due to issues with the mail, you may be charged late fees by a utility company, credit card company or other payee. Automatic bill pay allows you to avoid late fees by reliably sending your payments every month on the dates you specify.

Simplify Bill Payments

Paying your bills every month can be a time-consuming task. With automatic bill pay, you only need to set up your bills one time. As a result, you’ll have more time every month to enjoy hobbies, activities and time with friends and family.

Eliminate Postage Costs

Sending out bills by mail can be costly, and postage rates rise frequently. Automatic bill pay eliminates the expense of postage stamps completely by turning the responsibility for submitting payment over to your bank or credit union.

Support Your Credit Score

Late and missed payments can have a negative impact on your credit score, making it more expensive and difficult for you to borrow money in the future. Because automatic bill pay greatly reduces the risk of missed and late payments, signing up for the service can help protect your credit score.

Environmentally Friendly

Switching to automatic bill pay is better for the environment because there's usually no paper check to mail and transport. Once you sign up for automatic bill payment, many payees will give you the option to receive electronic statements, which reduces paper waste even more.

Potential Drawbacks of Automatic Bill Pay for Seniors

Despite its many benefits, automatic bill pay does have some potential downsides for seniors that you should be aware of before signing up.

Risk of Overdrafts

If you don’t have enough money in your account to cover an automatic payment, banks and credit unions may still submit the payment. When this occurs, your account will usually go into a negative balance, and you may be charged an overdraft fee.

Changes in Record-Keeping

If you currently pay your bills by check, moving to automatic bill payment may mean a change in the way you keep your financial records. For example, you may need to sign in to online banking regularly to update your check register. While you can adjust to a new system, there may be temporary challenges while you get used to new ways of doing things.

Possible Need to Update Information

Should your account number, payment date, payment amount or other information for a bill change at some point, you’ll need to sign in to the automatic bill payment site and make an update. Neglecting to do so may mean that your payment fails to go through or gets delayed, resulting in late fees and other inconveniences.

Technical Complications

While banks and credit unions typically strive to make automatic bill payment as easy to use as possible, technical problems can occur. System outages or internet problems may make the service temporarily inaccessible, or you may need to update your web browser, operating system or mobile device to access automatic bill payment.

Tips for Using Automatic Bill Pay

If you do decide to sign up for automatic bill pay, following these tips can help you have a positive experience.

1. Ask Your Bank for Assistance

If you’re unsure how to get started with automatic bill pay, contact your bank or credit union. They may be able to walk you through the process over the phone or arrange for you to stop into your local branch for a demonstration.

2. Guard Against Overdrafts

Signing up for your bank or credit union’s online banking service and checking it daily can lower the likelihood of overdrafts. You can also talk to your financial institution about overdraft protection, a service that automatically draws money from a savings account, credit card or line of credit to prevent fees and negative balances when an overdraft occurs.

3. Keep Tabs on Your Accounts

In addition to checking your bank account regularly, keep a close eye on your payee accounts. Review your paper statements or your online account history monthly to ensure payments were made on time and there were no billing mistakes.

4. Protect Your Bill Pay Account

When signing up for bill pay, choose a different password than the ones you use for email, social media and other online accounts. Avoid sharing your password with anyone, and change it periodically to help keep your account secure.