Nowadays we need reminders for everything from meetings, bill payments, buying groceries, some people even need reminders for drinking water. Thanks to auto-payments these reminders have reduced. Auto-payments are nothing but prior instructions to a bank to automatically debit money from your account for paying recurring bills (such as phone, electricity and credit card bills) on their scheduled dates.
How to set it up?
To set up this facility most banks require the customer to fill out a form at their branch or call their customer care and register over the phone. You’ll need to provide details of the biller (person to whom you’re paying the bill) such as Customer/Account/Relationship/Policy Number (This is a unique account number with the biller usually mentioned on every paper bill sent to you by the biller) along with your bank details such as name & MICR code. This is just the general guide to set up auto bill payments and the process might differ from bank to bank.
Why to set it up?
Auto-payment facilities give you the convenience to pay your bills. After setting this up you don’t have to worry about missing a bill payment ever. This protects your credit score and also helps you avoid the penalty charges on delayed payments. This facility also helps in being disciplined with investments. For example, Putting SIP amounts for your mutual funds or paying your recurring deposit through auto pay every month.
What to be careful while setting this up?
Obviously like all other things, auto pay has certain cons as well. The biggest one being having sufficient funds in your account because without this your bill payment will bounce. This would leave you with an unpaid bill, late payment dues and sometimes even a charge for a returned payment.. Secondly when you make auto payments for varying bill amounts (like credit card bills) keeping regular tabs on them would become difficult. You’d never catch a fraud or mistake on your bill nor would you be cautious of how much you’re spending. Lastly, sometimes you might forget to cancel an auto payment facility on a service you don’t use anymore.
What alternatives could you use to this service?
I’m not saying because of all the above cons you’d have to resort to the good old cheques. Nowadays you can pay your bill online. So opt for netbanking or a digital wallet for few bill payments such as credit cards and phone bills and use the auto-pay facility for fixed bill payments like EMI and SIP’s.
If you’ve still got any questions feel free to comment below and ask us and we’ll address them immediately.