Is Auto Pay a Debt Trap?

Almost anything that promises to make your financial situation better can also make it worse if you let it.  Consider buy now pay later (BNPL).  It does not charge interest, and the monthly installment payments are low, but the BNPL debts can quickly add up if you make too many new BNPL purchases before the old ones are paid off. Many customers do this, because if they were not at risk of this behavior, they would not need BNPL.  Likewise, clipping coupons can help you get lower prices on items you were going to buy anyway, or it can lead you to buy things you don’t need.  Even auto pay can have a positive effect on your finances or a negative one.  Precisely because you think about it so little, it can lead to you paying more money on your bills than you owe, or contributing less toward debt repayment than you can afford.  If you feel like all of your income is going toward automatic bill payments, contact a Miami debt lawyer.

How Do Automatic Payments Affect Your Monthly Budget?

Many of us have some or all of our recurring bills set up on auto pay.  These are some of the many types of bills for which automatically recurring debits from bank accounts and automatic charges to credit cards are an option:

• Utilities, such as electricity and water
• Loan payments, such as car loans or home mortgages
• Subscription services, including gym memberships, streaming services, and smartphone apps
• Phone, Internet, and cable bills
• Credit card bills
• Car insurance premiums

Auto pay arrangements can make budgeting easier because you already know how much you will be paying toward each auto pay-enabled bill each month.  Of course, one danger of automatic payments is that, because they are automatic and you don’t think about them, they can lead to overdrafts and late fees if the vendor debits them from your account after you have used what little money remains in your account toward an emergency expense.

Sometimes Intentionality Is Better Than Convenience

As any coupon shopper or frugal retiree will tell you, the more time you invest, the more money you can save.  If you take your bills off of auto pay and deal with them on an individual basis, this can be beneficial to your finances, as long as you are organized enough not to forget when each bill is due.  When it comes time to pay for another month of a subscription, you might decide that this is the month to cancel your subscription and free up funds in your budget.  Likewise, when it comes time to pay your credit card bill, you might find that you can afford to pay more toward the balance than you paid last month.

Work With a Debt Lawyer About Auto Pay Debt

A South Florida debt lawyer can help you if all of your money is gone by the time you pay the recurring bills that you have set up on auto pay.  Contact Nowack & Olson, PLLC in Miami, Florida to discuss your case.

Source:

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