How to Set Up Auto-Pay So You Never Miss a Bill

Auto-pay is a setting that automatically pays a bill every month without you having to log in each time. You set it up once, and from then on the payment goes out on the same day each month. It eliminates late fees and the stress of remembering due dates.

There are two types of auto-pay. The first is a fixed-amount auto-pay, which works well for loans or subscriptions where the amount is always the same (like a car payment or Netflix). The second type pays your full statement balance or a minimum amount each month — this is common for credit cards.

You can set up auto-pay in two places: through your bank (your bank pulls the money and sends it) or through the billing company directly (the company pulls the money from your account). Either works. The advantage of setting it up through the billing company is that they will always pull the exact correct amount, including any changes to your bill.

Before enabling auto-pay, make sure your checking account always has a buffer of at least $500-$1,000 above what you need. Auto-pay pulls money on a fixed schedule, and if your balance is low on that day, you could overdraft — meaning your account goes negative, which triggers overdraft fees.

Review your auto-pay transactions once a month. Just because it is automatic does not mean you should never look at it. You want to catch errors, unexpected rate increases, or subscriptions you forgot you were paying for.

(Source: Consumer Financial Protection Bureau, consumerfinance.gov/ask-cfpb)