The risks of missing a bill include interest, fees, and higher APRs

By Benjamin Szweda

AAA World Article

Each day your mailbox and inbox fill up with junk mail, but occasionally tucked in between all the clutter is an important bill. The risks of missing the bill can be great and include interest, fees, being switched to a higher APR, or even having a service you rely on lapse. To avoid these negative experiences bills can be set to pay automatically. Auto-pay can be set up directly with many vendors or managed through your bank if a bill pay service is offered. 

With your bills paying themselves you will not have to worry about confidential mail sitting in your mailbox or missing an important bill when out of town. Services you rely on will also still be available to you when you need them. This doesn't just apply to your favorite streaming service, but more essential subscription services too. For example, you don't likely often think about your in-vehicle safety and security system or your roadside assistance membership until you need it and that's when you hope it has been paid for. 

Participating in auto-pay can also protect your privacy and reduce your risk of falling victim to identity theft. When enrolled in automatic payments you aren't sending checks in the mail or slips of paper with your credit card number on them. This information will then be handled by fewer employees. If you participate in bill pay through your bank, the check that gets sent out usually doesn't have your personal account number on it adding another layer of security.

If you are really late or regularly late paying your credit card bills, the credit bureaus may be notified. This will likely affect your credit score, and a late payment notice may appear on your credit report for up to seven years. According to Credit Karma, "payment history information typically accounts for nearly 35 percent of your credit score, making it one of the single most important factors in calculating your score."

Auto pay can be structured in various ways depending on where and how you set it up. Often you can order the entire bill to be paid, a specific amount, or just the minimum amount due. Even doing the latter will grant you protection against late fees and a potential increased  penalty APR.  If you set up all your bills for automatic payment or at least commit to managing them through your bank's bill pay portal, you can altogether forgo the expense of buying checks, stamps and envelopes.

If you choose to participate in your bank’s bill pay service, it may be possible for you to get all your bills and statements to show up in your bank's bill pay portal. Not only does this save time from logging into many different websites and remembering many different passwords, but all your bills are visually presented in one place. With your running bank balance close at hand, you are also less likely to overdraw your account and incur other fees.