Missing your monthly credit card payment can be a financially costly move. Not only will your issuer charge a fee, it can have a seriously negative effect on your credit score. But gone are the days of having to write a check and mail it out. You can now pay your credit card statement online and automate the process by having a payment automatically sent from your checking account or savings account. Autopay can help you better manage your finances, stay on top of your bills and protect your credit score. Here’s everything you need to know.
What is autopay?
Autopay is a feature you can activate on your credit card account that streamlines the monthly payment process. Instead of manually making a payment after receiving your credit card statement each month, you can set up a process so that the payment is made automatically.
How to set up credit card autopay
It’s easiest to set up autopay on your issuer’s online portal. You can choose a variety of settings including whether to make the minimum payment, pay off the entire statement balance or choose to pay a fixed amount. You can also pick a specific date to process your payment as well as a funding source.
Ideally, you want to pay your balance in full each due date for the best effects on your credit score and to avoid interest charges. If you can’t do that, choosing an amount that’s higher than the minimum balance will help you pay down credit card debt more quickly. The minimum payment is the least you can pay in any given billing cycle without incurring penalties.
Which issuers offer autopay?
All major issuers offer this feature, including the following:
- American Express
- Wells Fargo
- Chase
- Discover
- Citi
- Bank of America
- Capital One
- U.S. Bank
Why should you sign up for autopay?
It’s easy to accidentally miss a payment’s due date, especially if you juggle multiple credit card accounts. In addition to denting your credit score, a late payment can result in expensive fees and may trigger a penalty APR and higher interest charges.
While credit card issuers generally give you a grace period -- often 30 to 60 days -- before reporting your late or missed payment to the credit bureaus, late or missing payments can have a long-lasting impact on your credit score. Setting up autopay can save you from the more immediate pain of higher credit card payments as well as longer-term negative effects on your credit score, which can lead to higher interest rates on future applications for loans and rentals.
Pros
Avoid missed payments
Avoid late fees
Avoid interest
Cons
Potential to overdraw your bank account
Less awareness of spending
Potential to pay fraudulent charges if you’re not paying attention
The cons of autopay make it clear that, though your payments will be automatic, you’ll still have to keep a watchful eye on your bank and credit accounts.
Does it cost extra to use autopay to pay your credit card bill?
No. Credit cards offer an autopay option for free. You may elect to receive an email a few days before your payment is scheduled to draft from your bank account.
The bottom line
Autopay can help you avoid the headache and cost of missed payments and prevent damaging your credit score. Still, you’ll want to keep an eye on your bank account balance to make sure you don’t overdraw your account or get stuck with fraudulent charges.
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