Winsett: What's the difference between "Auto Pay" and "Bill Pay"? | Chattanooga Times Free Press (2024)

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Winsett: What's the difference between "Auto Pay" and "Bill Pay"? | Chattanooga Times Free Press? ›

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.

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.

A direct debit is a regular payment that's approved by you but set up and controlled by the business you are paying. The amount can change with each payment. An automatic payment is a regular payment that's set up and controlled by you.

Insufficient funds

The biggest drawback that comes with taking your hands off bill paying is the increased risk that those automated drafts will take your account into the red.

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.

Utilities and Other Variable Expenses

Therefore, it's generally safer not to set utility bills on autopilot. “Bills that fluctuate aren't good fits for autopay, such as your electric or water bill,” said Bethany Hickey, banking and lending expert at Finder.

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.

If you have an account with a bank or credit union, consider if bill pay might be right for you. Many people have recurring fixed payments for loans, rent and subscriptions that bill pay can help manage. You can also add other payees that you frequently pay, even if they're not on a regular schedule or a fixed amount.

It Could Save You Money

Some lenders give borrowers a small interest rate discount for using autopay, and a reduced interest rate could save you money over the life of your loan. Using autopay can also save you money by helping you avoid late payment penalties.

Does autopay pay the full amount? ›

What Are the Types of Autopay? Across credit card issuers, you will typically encounter three autopay options. These include setting the automatically paid amounts to your minimum payment, a custom amount or your full statement balance. Paying the full statement balance is the only option that avoids accruing interest.

That means the bills that have amounts that don't change drastically month to month. Things like your phone, your internet, even your rent, set those up, don't worry about them, but don't set your utility bills on auto pay, heat and water bills can clue you into how much you're really using.

Autopay arrangements are convenient and can lower the risk of late fees, but companies also push autopay because it discourages customers from switching to another service—what the industry calls “stickiness.”

Well, you can think of autopay and bill pay in a similar way: autopay is bill pay but bill pay is not autopay. Let us explain–autopay allows you to pay your bills every month through recurring transfers from your checking account, automating the bill payment.

If you make a full monthly payment before your due date, AutoPay won't process for that billing cycle. If you make a smaller payment that isn't enough to pay the full amount due for the month, AutoPay will still process the full monthly amount due on your account.

Federal law grants you the right to cancel an automatic debit card payment, or stop ACH payments, even if you previously permitted them. There are generally no fees or penalties for canceling an automatic payment preference.

Automatic payments will be withdrawn from your customer's bank account, or charged to their credit card, on the invoice due date by default, unless you deselect Automatically Pay Bill when entering an invoice. If the due date is a holiday or weekend, Bill.com initiates the payment on the next business day.

What is Bill Pay? Bill Pay is an online bill payment service that allows you to simply and conveniently pay a business or person within the United States. You determine who you want to pay and when you want to make the payment.

An online bill pay service works by deducting a payment from your account balance and transferring it to a service provider. A bill pay service may be included as part of a checking account's features.