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Should You Set up Automatic Payments for Credit Card?

Written by Allison Martin

Allison Martin is a personal finance enthusiast and a passionate entrepreneur. With over a decade of experience, Allison has made a name for herself as a syndicated financial writer. Her articles are published in leading publications, like, Bankrate, The Wall Street Journal, MSN Money, and Investopedia. When she’s not busy creating content, Allison travels nationwide, sharing her knowledge and expertise in financial literacy and entrepreneurship through interactive workshops and programs. She also works as a Certified Financial Education Instructor (CFEI) dedicated to helping people from all walks of life achieve financial freedom and success.

Updated June 11, 2024​

5 min. read​

should i set up automatic payments for credit card

Are you having trouble keeping up with your credit card payment due dates? One solution you might consider is setting up automatic payments for your credit cards. This method allows you to link your bank account to your credit card, making monthly payments automatically on a predetermined date. This approach not only helps you avoid late fees but also ensures that you maintain a healthy credit score by making consistent payments on time.

Before you decide to set up automatic payments for your credit card, it’s essential to understand how the process works and its potential benefits and drawbacks.

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How Do Automatic Payments for Credit Cards Work?

Automatic payments for credit cards enable you to automatically pay your credit card bills on time without having to worry about manually initiating a transfer or writing a check each month. To set up automatic payments, you’ll first link your credit card account to a checking or savings account, from which the payments will be withdrawn.

Many credit card issuers offer various automatic payment options. You can choose to pay the full balance, the minimum payment or a specific amount each month. In some cases, you can even opt to pay the statement balance as long as it doesn’t exceed a certain threshold that you set. This flexibility allows you to customize your autopay settings according to your budget and preferences.

When you enroll in automatic payments, your credit card issuer will typically send you an email or text notification before withdrawing the payment from your bank account. This is to ensure you’re aware of the upcoming transaction and have sufficient funds in the connected account.

The Pros of Setting Up Automatic Payments for Credit Card

Here are some key benefits of setting up autopay for your credit card:

Avoiding Late Fees

By setting up automatic payments for your credit card bills, you can significantly reduce the risk of incurring late fees. When you automate your payments, the exact amount due will be deducted from your bank account before the due date, ensuring that your payment is always on time.

Building Credit Score

Consistent, on-time payments are essential to building and maintaining a healthy credit score. When you set up automatic payments for your credit cards, you’re making it easier for yourself to maintain a good payment history. This can positively impact your credit score, making it easier for you to secure loans, rent an apartment or even get a job in the future.

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Time-Saving and Convenient

Paying your credit card bills manually each month can be time-consuming. Plus, it’s easy for due dates to come and go. Automating the process saves you time and eliminates the need to remember the due date. Furthermore, it provides peace of mind, knowing that your payments are being taken care of without needing to log in constantly and schedule payments each month.

Streamlining Financial Management

Having your payments automated and taken from your bank account allows you to better manage your finances by reducing the risk of missed payments and the stress of keeping track of multiple due dates. Furthermore, it simplifies budgeting, as your credit card payments will be consistent and predictable.

The Cons of Setting Up Automatic Payments for Credit Cards

Unfortunately, automatic payments also come with their share of drawbacks.

Overdraft and Insufficient Funds

One of the main drawbacks of setting up automatic payments for your credit card is the possibility of overdrafts and insufficient funds. If you do not have enough money in your checking account when the automatic payment is due, you could incur overdraft charges or late payment fees. To avoid these issues, it’s crucial to monitor your account balance regularly and ensure that you have sufficient funds to cover upcoming payments.

Loss of Control Over Payment Timing

By setting up automatic credit card payments, you could lose some control over the timing of your payments. This can be especially problematic if your income or expenses fluctuate, as you may end up paying your credit card balance at a less-than-ideal time financially. You can still make manual adjustments to your payment schedule, but this may involve more work and attention than simply making individual payments when most convenient.

Risk of Unnoticed Fraudulent Charges

When you enroll in automatic payments, there’s a risk that fraudulent charges on your credit card could go unnoticed. Since payments are made automatically, you might not be as vigilant about checking your credit card statement for unauthorized transactions. This could lead to further financial complications if you don’t spot fraudulent charges in a timely manner. To mitigate this risk, it’s important to review your credit card statements regularly and report any suspicious activity to your card issuer as soon as possible.

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Challenges with Changing or Canceling Payments

Making changes or canceling automatic credit card payments can sometimes be challenging. Depending on the payment system used by your card issuer, altering your payment settings may require contacting customer service or navigating complex online interfaces. Additionally, you might encounter difficulties if you need to update your checking account information or want to change the amount or date of your automatic payment.

Factors to Consider Before Setting Up Automatic Payments for Credit Cards

Evaluating Your Personal Financial Situation

Analyze your spending habits, budgeting skills and your ability to manage multiple credit card accounts. Automatic payments can help you avoid late fees and protect your credit score, but it’s essential to ensure that you are able to handle these payments consistently without causing any strain on your finances.

Choosing Between Full Balance, Minimum Payment, or Custom Amount

Paying the full balance each month is the best way to avoid interest charges, but it might not be feasible for everyone. If you choose to make the minimum payment, remember that this may lead to accumulating interest on your account. Or you can opt for a custom amount that falls between the full balance and the minimum payment, depending on your budget and payment goals.

Assessing the Reliability of Your Income

One key factor to consider when deciding on automatic credit card payments is the reliability and consistency of your income. If your income fluctuates or you encounter unexpected expenses, it may be difficult to ensure that there’s enough money in your bank account to cover your credit card payment. In such cases, closely monitoring your bank account and adjusting the automatic payment amount might be necessary to avoid overdrawing your account or incurring late payment fees from your credit card issuer.

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Bottom Line: Should You Set up Automatic Payments for Credit Cards?

Before deciding if automatic payments are best for you, here’s what to do next:

Evaluating All Factors

One of the main benefits of automatic payments is that it helps you avoid late fees. By ensuring your payments are made on time, your credit score remains in good standing, and your relationship with the card issuer remains positive. Moreover, the convenience of automatic payments helps you manage your balance effectively and spend less time worrying about due dates.

However, automatic payments may not be beneficial for everyone. If you struggle to maintain a consistent balance in your bank account, automatic payments might lead to overdrafts, which could cause additional fees. Additionally, having automatic payments may limit your awareness of your spending habits, resulting in overlooking fraudulent charges or potentially overspending.

Experimenting for a Trial Period

Try experimenting with automatic payments for a trial period, perhaps a few months. This way, you can gauge how well it fits into your financial routine and determine if it genuinely alleviates stress or causes further complications.

During this trial period, make sure to monitor your bank account closely to ensure there are no unexpected charges or overdrafts. It’s also vital to keep track of your credit card spending and continue to pay close attention to your statements.

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