3 advantages and 2 disadvantages of automatic payment of your credit cards

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if you use credit cards, you may want to set up automatic payment. This would mean arranging for the money you owe your creditor to be deducted directly from your account each month bank account. When you set up automatic payments, you don’t have to manually pay your card when it’s due — it does the process for you.

Setting up automatic payments on your cards offers some great benefits. But there are also some undeniable downsides. You should consider the pros and cons of paying for your cards automatically before deciding to use this feature.

Benefits of automatically paying your credit cards

Here are some of the biggest benefits of setting up automatic payments for your credit cards.

1. You can make sure you cash out your balance and avoid interest: You have choices when setting up automatic payment. You can choose to only make the minimum payment or pay your entire balance in full. If you decide to cash out your balance, you can ensure that you never have to pay credit card interest. This can save you a lot of money in the long run since cards charge high interest rates.
2. You don’t risk forgetting a payment: Setting up automatic payments ensures nothing slips through the cracks. Forgetting a payment can result in late charges and hurt your balance, but you don’t have to worry about that when auto-payment is turned on.
3. Here’s how to build your credit: If you make payments with your credit card on time each month, those payments will be added to your credit account. Payment history is the most important factor that determines your credit rating. Therefore, your card’s automatic payment can have a big impact on how you get a good review.

Disadvantages of paying your cards automatically

And here are some of the biggest downsides:

1. You may not be keeping a close eye on your spending: If money is only being withdrawn from your bank account each month to pay for your credit card, you may not be fully aware of how much you’re spending. You’re less likely to pay attention to your card balance if you don’t have to pay for it manually, and you’re less likely to check your statement to see what you’re spending and look for ways to make cuts.
2. You could overdraw your bank account: If you sign up for your card’s automatic payment and you end up not having enough money in the bank to cover it, it could result in an overdraft on your account. This leads to high fees that can set you back financially.

Is automatic payment for your cards right for you?

Ultimately, you need to weigh the pros and cons of setting up Auto-Pay. If you’re concerned about overdrafts or think paying automatically on your card will result in less responsible spending, you may not want to continue. But if you’re sure you’ll have the money and will still stick to your budget, setting up automatic payment is a great way to ensure you never face consequences related to paying late just because of something slipped through the cracks.

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