A credit card is a great way to meet your financial needs, but the actual hassle is ensuring timely repayments. There are times when we get busy, and it slips our minds to pay a credit card bill. We end up getting a late-payment penalty, due to which our credit score is adversely affected.
If you are constantly missing payment dates, you might want to apply for a credit card autopay facility. It is provided by various credit card issuers to automatically pay off your balance or minimum due when the statement is posted. Here is everything to know about the credit card autopay facility:
What is credit card autopay?
It is an easy and convenient way to pay your credit card bills. To activate the autopay option, you can sign up using your account online or call your credit card issuer to set up the auto payment. As you authorize the credit card company, the payment shall be debited from your account on a set date each month.
Benefits of credit card autopay
- A credit card autopay can help you pay your bills on payment.
- It can also boost your credit score if the payments are made on time.
- It prevents late fees, overdraft charges, and return payment fees.
- It effectively saves time and effort.
- It also helps to earn rewards by making on-time payments of the balance amount.
How to set up autopay?
It is simple to apply for a credit card autopay from your account setting by selecting either an automatic or recurring payment option.
There are three credit card autopay options such as:
- Minimum payment
If you set up an auto payment of at least the minimum amount due, you will be safe from incurring late payment fees. The minimum amount varies from issuer to issuer. Some credit card issuers charge a flat fee while others charge a certain percentage of the total balance.
A word of advice — if you choose to apply for a credit card autopay option at the minimum amount monthly, ensure making supplementary payments to avoid getting long-term debt.
- Pay the full balance
Making payment of the monthly credit card in full is always an informed decision. It brings more rewards and improves the credit score. However, you choose to pay the full balance, ensure that your account from where the payment is made has enough funds available at the time of automatic withdrawal to avoid overdraft charges and a return payment fee from your issuer.
- Pay a fixed amount
You can set up automatic recurring payments of a fixed amount every month. It works best if you have stopped making purchases with that card. It is a great debt reduction strategy based on a favorable budget.
Furthermore, you must ensure to pay the full balance, or else you will have to incur an added interest. So, setting up autopay for a fixed monthly amount can assuage mental pressures caused by late payments.
What factors to consider before setting up autopay?
Although it sounds enticing and convenient, autopay is not for everyone. Analyze your financial health and then decide if you wanted to pay less attention to your credit card statement and spending habits.
It is also crucial to monitor your account for overspending or fraud and always remain mindful of over-drafting while choosing autopay.
Credit card autopay is a better way to protect yourself against added fees and overdraft charges if you have a habit of forgetting to pay your balance on time. It ensures that you never forget a payment deadline.