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Don't Put Monthly Bills On Automatic Debit

Friday, April 5, 2013 - 7:01 AM
This is a good reminder from yesterday’s Clark Howard show notes:
Use electronic bill pay that you set up so you can shut it down anytime you want. That's the distinction between e-bill pay and traditional ACH payments. The former you control, the latter is out of your control.

There's a larger problem here, of course: The rules on drafting accounts are set up for the benefit of business with zero consumer protections.

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With many reward checking accounts requiring ACH debits, this might encourage people to pay their bills with automatic ACH debits. Fortunately, most reward checking accounts count ACH transfers that you set up from an online bank.
Ken TuminKen Tumin5,472 posts since
Nov 29, 2009
Rep Points: 125,708
1. Friday, April 5, 2013 - 7:39 AM
I actually have all my bills go to my cash back credit card and have that credit card at the same bank as my checking account and have that card deducted from my reward checking account right after my direct deposit is put into the account. That way the maximum is in the account to earn interest at the high level and the amount over that pays little or no interest is used immediately to pay the card off. If I used any credit card I would always have at least the minimum paid every month from the checking account.  You never know if a bill would be lost, there was an illness or death in the family or if the day the bill was due was changed etc. The credit card is the only thing I have deducted from any of my accounts. I charge everything except my bundle (tv, phone and TV) which I charge by phone when  I get the bill and the same with my house and car insurance. This way I have proof of all payments. If the insurance bill is lost in the mail etc., I have been assured by my insurance man that the office will  call me to make sure you knew you did not pay it. I have my medical insurance deducted from my pay check. 
Ally6770Ally6770943 posts since
Jan 16, 2010
Rep Points: 2,742
2. Friday, April 5, 2013 - 9:30 AM
I have done the autopay for many of my bills for years and never had a problem.  I even have autopay for my credit card.  I like the way Rosie has all of her bills put on credit card.  That way she only has to check the credit card to make sure everything is paid on time.  I never thought of that years ago and don't feel like going through the hassle of changing things now.  It's a good idea tho.
paoli2paoli21,406 posts since
Aug 10, 2011
Rep Points: 6,152
3. Friday, April 5, 2013 - 10:34 AM
I'm not clear about what this article is talking about. I've never come across an automatic bill pay that you can't stop. They can't continue if you give them notice to stop. 

Of course, I have mine set up to automatically take out the full amount owed each month. So, if I were to end my contract (my bill) with that place, the only authority they are left with is to take out nothing, as zero would be the total amount of my bill. Perhaps this article is talking about people who set it up to take out a specific amount each month, a minimum payment, in which case this article is warning that minimum could be taken even if nothing is owed. 

I have no idea what "distinction" the article is talking about between e-bill pay and traditional ACH payments. I believe it is the same thing. e-bill pay IS using the ACH -- well, unless you are instead having that amount billed to your credit card -- but this article made no such distinction. 
me1004me1004374 posts since
Jan 16, 2010
Rep Points: 2,604
4. Friday, April 5, 2013 - 11:02 AM
My guess (it is not clear what Clark Howard was talking about) is that he was talking about auto-pay initiated from the said company (utility, etc.); thus not as well-protected as the banks' Billpay do. 

For example, NSTAR set up their Billpay in a strange way; some bank accounts need to to conformed to 10-digits format (adding zeros is necessary if the account number is not ten-digit long).  I was hit with a penalty fee due to my 8-digit account number. 

From that time onward, I always set up billpay via BofA website.

Again, it is a minor issue; Clark Howard has nothing better to write that day:D 
51hh51hh1,476 posts since
Jan 16, 2010
Rep Points: 6,427
5. Friday, April 5, 2013 - 11:11 AM
The problem is in the past (don't know about now)  when the cable or insurance or long term insurance bills (used to be the worst)  were canceled the premiums continued to be debited from accounts. Think that is why I still refuse to have my cable, or house and car insurance bills debited. I will charge them over the phone and get the cash back from the credit card. It used to be a time consuming effort to file a fraud paper out with the bank or credit union, use a stop payment type of transaction or in extreme cases close accounts and then the banks would work on getting the money back.
Ally6770Ally6770943 posts since
Jan 16, 2010
Rep Points: 2,742