- March 14, 2011
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Many of us, including myself, have been lulled into the comfort of using Automatic Payment (auto-pay) services for a majority of our bills. For those of you who are not familiar with this service, it’s the authorization you give to various billing departments to withdraw monthly payments directly from your designated checking or savings account. Sometimes these services may be billed directly to your credit card, which may help if you’re accumulating reward points. The transactions usually occur each month on the payment due date.
I wondered how long this was going on for and then took a closer look at the other auto-pay services … I felt like someone was stealing from me.
These services have been embraced worldwide because of their inherit benefits. If you use this service you have one less bill to keep track of, you save time and money (postage), and your bill is always paid on time which translates into good credit. A good credit history may qualify you for a reduced interest rate. This is particularly true if you are dealing with bank loans.
While the benefits greatly outweigh the negatives, there are some important, often overlooked aspects to remember. My first experience with auto-pay was quite positive and harmless. I was 19 years-old and just rented my first apartment in San Diego. I called to have the electricity turned on and signed up for auto-pay. I thought to myself, “What a great convenience, that’s one less bill I have to worry about.” However, as the years passed you can imagine I’ve accumulated a lot more of these “convenient services.” As a matter of fact, over half of the charges or credits on my bank statement were direct withdrawals or deposits made to my account. No question I was hooked.
Now fast forward five years later during a mid-March time-frame as I’m gathering information to pay taxes. I never really took a close look at my monthly bank statement as I knew approximately how much was going in and out and what the general balance should be. I took a closer look to search for various deductions and I noticed my Cable Bill was $20 a month higher than my original contract. I quickly did the math and realized that was an additional $240 per year I was paying. That was money I didn’t have to lose. I wondered how long this was going on for and then took a closer look at the other auto-pay services. I noticed that three others were also higher than I thought I was paying. I felt like someone was stealing from me.
The truth is that there was no one to blame but myself. I never bothered to check, and the rates just kept creeping upward. Generally these companies are mandated to send you a “Rate Increase Notice” in the mail unless your original contract had automatic scheduled bumps in the rate. They may have very well sent something out to me but since I knew there was auto-pay set up I probably just threw it out without reading it carefully. Some of the ones to look out for are cable companies, alarm system services, trash pick-up, and all utility bills. Again, it’s not that these companies are bad, it’s just that they have increased costs, which they pass on to you. Also, they are not fixed withdrawals as you would have in a loan or something similar. None the less, I recommend checking them all monthly. Then if you find a discrepancy, call the company, ask to speak to customer service, and negotiate a lower rate. It worked for me!
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