We here at Five Point Capital know that paying bills can be a hassle. Who has time to write a check, find a stamp, and make a trip to the post office, all on time for the check to arrive before the due date? As a result, we are sure that many people take advantage of the automatic deduction services that billing companies offer. With this type of service, instead of sending a monthly bill to your residence to be mailed back with a check, you provide the company with your banking information and they automatically deduct what you owe in full from your bank account every month.
In some ways, this process is great. You never have to worry about missing a payment, incurring interest on partially paid bills, having to find stamps, or having to make a trip to the mailbox or post office. However, the service also has some downsides that many people do not take into consideration before selecting this payment option. For one, the service works just like writing a check; if there is not enough money in your checking account to pay the service in full, your account will be overdrawn. Then you are at risk for both paying late fees for the bill and for paying overdraft fees to your bank. Secondly, you cannot choose when to pay the bill. Most of these deductions are taken on a set day of the month, while for some it may be better to pay bills on a Monday, after payday on Friday, or after a trip to the bank to deposit paychecks. Finally, what might be the most annoying is that when you cancel the service you are paying for, it sometimes takes a while for the cancellation to process. In the meantime, you continue to have money withdrawn from your account and then must wait for reimbursement checks after the cancellation has gone through.
All of these problems can be avoided by going through your bank instead of going through the company who provides you the service. Most banks, including Bank of America, Citizen’s Bank, and Wells Fargo, have a “bill pay” option which works very similarly to an automatic deduction. The money comes directly out of your checking account and goes to the company of your choice. The benefits are that since you are in control, you can choose the date of payment to coincide with when you get paid, your bank will not make the payment if there are not enough funds in your account so that you can avoid overdraft fees (and normally they will send you an alert telling you there were insufficient funds to pay the bill so that you never miss a payment), and you can cancel payments whenever you choose without having to wait for a cancellation to process.
Your money is your money—hard earned and to be spent how you so choose. In this tough economy, every little cent counts, so we recommend keeping in control as much as possible by using bill pay services through your bank instead of automatic deductions through an outside company.
Tags: 5 point capital, automatic deductions, bank of america, bill pay, citizen's bank, five point capital, payday, stamps, wells fargo
