For Autopaying Bills, Should You Use Credit or Debit?

Autopay is a way of setting up your bills to be paid automatically on the same day every month. Many companies allow customers to either connect directly to a bank account for payment, or use a credit or debit card to pay their monthly bill in this way.

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When it comes to using a card for autopay, there are pros and cons of each. Let’s review them so you can decide which is best for you.

Benefits of Paying With Credit

Convenient

The main reason many people pay their bills with a credit card is its convenience, according to The Balance. Many companies allow auto-payments with credit cards. They’re easy to set up on autopay systems, and you don’t have to worry about the money coming out of your checking account.

Improves Your Credit Score

If you’re responsible about paying off the credit card you use for autopay each month, or only carry a low balance, this benefits your credit score. This enables you to get better rates on things like loans, mortgages and car purchases.

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Don’t Have To Come up With the Money Immediately

If you’re living paycheck to paycheck, or your bills are due before your paycheck comes in, credit allows you the convenience of being able to pay your bills automatically without having to worry immediately about when you get paid. Of course, you want to be sure you can pay off your bill down the road.

Earn Rewards

Credit card companies don’t care what you’re using your card for. So, you can rack up rewards no matter what you’re paying for, which brings benefits far beyond just paying bills, such as earning points that can be redeemed for goods, services and travel, among other things.

Downsides of Paying With Credit

Potential Interest Charges

It’s tempting to pay with credit, because you don’t have to take any money out of your checking, which can make you feel temporarily flush with cash. However, paying your bills automatically by credit card can get expensive if you don’t pay off your full bill every month. You will then be racking up interest on bills that you really don’t need to accrue.

Late Fees Are a Problem

Additionally, if you’re late on your credit card payments, then you could end up paying extra fees on top of interest on top of what you owed for your bills, which is not a great way to get ahead financially.