Like giving a thief the keys to your home
One of the most fascinating developments of the 20th century–to me at least–is automatic bill paying. Forget about cloning people and smart bombs. Automatic bill pay blows my mind. But not in a cool, Lord of the Rings kind of way.
With automatic bill paying, a person signs up to have some monthly payment, such as a car payment or utility bill, deducted every month automatically. The benefit of automatic bill paying is that it saves time. You don’t have to write out a check, or log into the creditor’s website to make a payment. Hell, you don’t even need to remember that the payment is due, because the creditor takes the money automatically.
But think about what is actually happening with automatic bill pay. You’re allowing the creditor to go into your bank account every month and take money from you. It’s like giving them the keys to your bank account. And that just seems nuts.
When you pay a bill the old fashioned way–by check or online, you’re specifying and authorizing the amount of the payment, and who the money needs to go to. Here, you’re in control of the transaction. With auto bill pay, the payee is in control.
Sure it does save a little bit of time. But really, how long does it take to write a check? Creditors include a self-addressed envelope with the bill. You just have to put a stamp on it. And if you’re not into snail-mail, pretty much all creditors accept online payments. You just log into their website, click a few links, and you’re done. In the end, what are you saving with auto bill pay? Five minutes? And what are you giving up? Access to your bank account. That is not an even trade.
And nevermind the possibility of creditors taking too much money from the bank account. Here’s another common problem with auto bill paying: when you need to stop making the monthly payments, (let’s say you cancel power because you’re moving, or you finish paying your car loan) the creditor doesn’t stop taking the money every month. In my job, I hear a lot about things like this happening. My clients tell me about the time and headaches they’ve endured on the phone with the creditor getting the problem corrected.
One of my clients, Julie, told me how the company that financed her car once took two month’s payments from her account. They corrected their mistake and credited her account, but she had to spend an hour on the phone making sure everything was right. I hear about this all the time.
So you sign up for auto bill pay to save time, but if it takes repeated phone calls to correct mistakes, what are you saving?
Automatic bill paying reminds me of the guys I’ve seen at the bar who will put a pile of cash on the bartop as they drink. And everytime the guy orders a drink, the bartender picks through the pile of money for what he needs.
I never understood that either. There’s just something inherently wrong with a stranger rifling through your money.