The Pros and Cons of Automating Your Credit Card Payments

Is setting up automatic credit card payments the right choice for you?

When it comes to paying your credit card, you can either manually submit the payment each month or you can set up automatic payments. If you set up auto pay, you'll arrange with your card issuer to have money taken out of your bank account automatically before the due date.

If you are considering setting up autopayments, it's important to consider the pros and cons of this approach before you move forward.

These are the pros of automating credit card payments

Here are the biggest advantages of automating credit card payments.

• You won't miss a payment. Paying your card on time can help you earn a good credit score. Your creditors will report your payments, and a record of paying on time is the most important factor in determining your score. If you set up automatic payments, your card will always be paid on time so you won't need to worry about hurting your score by paying late or missing a payment altogether.
• You can make sure you don't end up carrying a balance. You can choose to set up automatic payments for either the minimum amount due or your statement balance. If you opt to automatically pay the full balance due, you can make sure you never get stuck paying credit card interest at a high rate.
• It's more convenient to autopay your cards. If you've set up automatic payments, you won't need to worry about sending a check or signing into your account to manually transfer money to your creditors each month. This is one less financial task to put on your to-do list.

These are the cons of automating credit card payments

And here are the disadvantages of setting up automatic payments.

• You face a risk of over-drafting. If you set up an automatic payment and don't have enough money in your bank account to cover it, you could overdraft your account. This could leave you facing high overdraft fees charged by your bank.
• You risk ending up carrying a balance. If you opt to set up an automatic payment for only the minimum payment due instead of for the full payment due, you could end up carrying a balance unless you manually sign in to pay the rest of your bill in full. You may not even realize how much interest you're paying over time -- or how long it takes to pay off your purchases -- if you take this approach.
• It's harder to track spending. Manually signing into your credit card account to review your statement and pay your bill is one way to keep yourself accountable and pay attention to what you're spending money on. It's easier to lose track of this if you don't bother to monitor your account and the bill just gets paid automatically.

Ultimately, you'll need to consider these pros and cons in light of your own financial situation. If you can confidently set up automatic payments for your full statement balance each month and you know you have enough money in your bank account that overdrafting will never be a concern for you, then automatic payments are most likely the way to go.

But if you need more accountability or want to make sure you check your bank account balance before paying off your card, then the downsides may outweigh the upsides, and manually paying your card may be a better choice.