Autopay or Online Bill Pay: Which Should You Use? - Experian (2024)

In this article:

  • Autopay vs. Online Bill Pay
  • Pros and Cons of Automatic Bill Payment
  • How to Choose Between Autopay and Online Bill Pay

When it comes to paying bills, you've likely ditched your checkbook—if you ever used one—in favor of online bill pay or autopay. While bill pay and autopay are similar, they work differently. With online bill pay, your bank sends payments to your creditor from your account. With autopay, your creditor takes money from your account. Here's how to decide which method is best for you.

Autopay vs. Online Bill Pay

Before deciding on autopay or online bill pay, it's important to understand how the two payment methods work.

How Autopay Works

Credit card companies, lenders, service providers and other vendors frequently offer autopay to customers. To set up autopay, you provide payment information to the vendor and give them permission to charge you automatically for every bill.

You can typically have autopay payments made directly from your bank account or by using a credit card. Sharing your credit card information can be safer than sharing your bank account information. By law, if you report credit card fraud within two days, you're responsible for only $50 of unauthorized charges. However, most card issuers offer zero liability.

When your bill comes due, the vendor automatically pulls the amount you owe from your bank account or charges that amount to your credit card (some providers may charge extra for credit card payments). Autopayments recur monthly, so you can "set it and forget it."

How Online Bill Pay Works

Online bill pay is a service most banks and credit unions offer customers for free. To use online bill pay, log in to your bank account online or in the banking app, and add billing information for the companies you plan to pay.

Once you've added a company into the system, you can either schedule payments manually or set up recurring payments for the same amount each month. On the date you choose, the bank initiates a payment directly from your account to the vendor.

Even companies that don't accept electronic payments can be paid with online bill pay. The bank sends a check to the company for you and even pays for postage. Online bill payments can generally be scheduled for the next business day or even the same day. However, payments requiring a check take longer to process, since a check must be generated and mailed.

Online Bill Pay vs. Autopay
Feature Online Bill Pay Autopay
How payments are made "Pushed" from your bank account "Pulled" from your bank account
Option to pay with credit card No Yes
Manual payment option Yes No
Recurring payment option Yes All payments are recurring
Payments automatically adjust when bills vary No Yes
Vendors can access your bank information No Yes
Can pay vendors who don't accept electronic payments Yes No
Potential to overdraw bank account Yes Yes
Possible discounts for using payment method No Yes

Pros and Cons of Automatic Bill Payment

Both autopay and online bill pay eliminate the need for checks and postage and worries about checks being stolen or lost in the mail. Both can help improve your credit score by preventing late or missed payments that can negatively affect your credit. However, each has its pros and cons.

Online Bill Pay: Pros

  • You can easily manage your bills, check your bank balance, transfer funds and more all in one place.
  • Service providers or creditors don't have access to your bank account information.
  • You control whether to automate recurring online bill payments or schedule payments manually each month.
  • Even vendors that don't accept electronic payments can be paid with online bill pay.

Online Bill Pay: Cons

  • Unless you change them, recurring payments go through even if you cancel a service or don't have a bill due that month.
  • Recurring payment amounts won't automatically change if your bill changes; you must change them manually.
  • Your bank account could become overdrawn if you don't have enough funds when a payment is due. That could mean late fees from creditors and non-sufficient fund fees from the bank.

Autopay: Pros

  • If a bill's balance changes from one month to another, autopay automatically adjusts to pay the full amount.
  • Companies sometimes offer discounts for using autopay.

Autopay: Cons

  • Autopay may not be available from all your vendors.
  • If you have insufficient funds when the autopay is due, your bill won't be paid, and both the merchant and the bank may impose fees.
  • If the vendor you're paying isn't trustworthy, your bank account information could be at risk of fraud.
  • When using a credit card to pay your bills with autopay, you could run up a high balance unless you pay the credit card bill in full each month.
  • Using a credit card for autopay could push your credit utilization ratio higher. Ideally, you should use less than 10% of your available credit; using 30% or more can hurt your credit score.

How to Choose Between Autopay and Online Bill Pay

To choose the best payment method, weigh the pros and cons and consider which matter most to you. However, there are some situations where one payment option might make more sense than the other.

  • Do your bill amounts vary from month to month? Autopay ensures your bills are paid in full without any action on your part.
  • Do you want to earn credit card rewards? Using a rewards credit card to pay bills with autopay can help you rack up cash back, points and other perks. Just keep an eye on your credit utilization ratio and pay your balance in full each month.
  • Do you want the convenience of managing all your bills in one place? Online bill pay could be best for you.
  • Do you want to be actively involved with your bill payment? Scheduling online bill pay manually helps streamline your finances without removing you from the process.
  • Are you worried about data breaches? Because financial institutions use encryption, multifactor authentication and other technology to protect your information, online bill pay can be safer than autopay.

The Bottom Line

Automating your bill payments via online bill pay or autopay can simplify your financial life. Making payments on time can help improve your credit score too. But even after setting up autopay or online bill pay, be sure to keep an eye on your bank statements, credit card statements and other financial accounts for potential signs of fraud. Free credit monitoring from Experian can make staying on top of your finances easier by alerting you to suspicious activity, changes to your credit utilization and more.

Autopay or Online Bill Pay: Which Should You Use? - Experian (2024)


Autopay or Online Bill Pay: Which Should You Use? - Experian? ›

Pros and Cons of Automatic Bill Payment

Is online bill pay the same as autopay? ›

With electronic bill pay, you are instructing your bank or credit union to make a payment from your account. With auto pay you are giving the control to the business and they will remove the funds from your account.

Is autopay good for credit score? ›

Automatic payments could help your credit score, but only if you time the payment to happen before the credit card's statement due date and around the same time you know there will be enough money into your bank account. Making even one late payment could ultimately hurt your credit score.

What is the largest downside of setting up autopay to pay your bill? ›

Undetected Errors: With automatic bill payments, it's easy to get complacent about the money that's leaving your account. Your biller could accidentally withdraw the wrong amount or double-charge you. It could even fail to withdraw the money at all.

Are there any disadvantages to online bill pay? ›

Online bill paying can be an expensive component to online banking as some companies will charge fees (See Online Banking Fees). If you've set up automatic bill payment and need to stop those payments, the process can take a while. With the ease of automatic bill payment, it's easy to forget which bill is due when.

What are the disadvantages of auto pay? ›

Disadvantages of automatic bill payments include the difficulty in canceling them, the need to keep adequate funds in your checking account, and the potential of incurring a returned payment or late fee.

Is online bill pay better? ›

Online bill pay helps you organize bills and keep track of due dates. It also makes it easier to see where your money is going, so you can make sure you have enough funds available to cover each payment. You receive and pay your bills all through your bank — one list, in one place.

What bills should not be on autopay? ›

Utilities and Other Variable Expenses

“If you have an especially high-use month, autopay can put you at risk for overdrafts if you're not prepared — and most overdraft charges are around $20 to $35 a pop.”

Should I use autopay? ›

It will prevent any late payments that may happen and protect your credit from past-due marks. You can always pay more later, but setting autopay to the minimum “can act as a backstop in case you forget to make the payment,” Harrison says.

Do lenders use FICO auto score? ›

The two big credit scoring models used by auto lenders are FICO® Auto Score and Vantage. We're going to take at look at FICO® since it has long been the auto industry standard. What is a FICO credit score? FICO is an acronym that stands for: Fair Isaac Corporation, the company that developed the FICO® credit scoring.

Why is autopay bad? ›

Overall, autopay can be a convenient feature, but it can also cause you to take your eye off the ball. You might miss issues like overspending, interest charges, fraud, billing errors and other opportunities to save money.

Is online bill pay safe? ›

Security: Online bill pay is more secure than paying bills with paper checks. Your financial information is encrypted when you send payments online, which makes it difficult for scammers to steal it.

What percentage of people use autopay? ›

More than 75% of people are using autopay for at least one bill, according to the payment company Fiserv. There's another thing you should consider when asked to enroll in an autopay system. Banks could be profiting off your convenience.

What are 2 benefits of using online bill pay? ›

The Many Benefits of Online Bill Pay
  • Saving Time. Setting up a payment through Online Bill Pay is quick and easy. ...
  • Saving Money. You can also save money with Online Bill Pay by eliminating the checks and stamps associated with traditional bill payments. ...
  • Decreasing Clutter. ...
  • Improving Your Financial Management.

What should you use online bill pay for? ›

Benefits of Online Bill Pay

And since Bill Pay can do check writing and remittance on your behalf, you no longer need to manually write checks and mail payments out. It's Reliable. For many people, keeping track of bills is one of the more tedious parts of money management.

What is the safest way to pay bills online? ›

ACH payments go through clearinghouses that enforce strict regulations, making it a secure payment method. ACH also typically offers lower fees because it's all digital and eliminates many of the processing fees associated with cards or checks.

What is the meaning of online bill pay? ›

Online bill pay is an electronic payment service offered by many banks, credit unions and bill-pay services. It allows consumers to make one-time or recurring bill payments through a website or app. Consumers may also be able to schedule future payments.

What is an online bill pay? ›

Banks and credit unions often offer online bill pay as a free service to customers. It can be an easy and convenient way to manage, track and pay bills directly from your account. With bill pay, you can add new companies or people—called payees—to your account and then send one-time or recurring payments.

What does online bill pay mean in money? ›

Online bill pay is a digital service that allows businesses to offer customers the option to pay their bill online. Customers can make payments directly from their bank account, credit card, or other payment method to the business using online bill pay.

What is online bill pay used for? ›

Online bill pay enables you to schedule and pay your bills right from your computer, tablet or mobile phone. An online bill pay service works by deducting a payment from your account balance and transferring it to a service provider.

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