The Perils of AutoPay #illumedati 1


Hey everyone, it’s Finance Fridays again. Today is just a short post about “The Perils of AutoPay”.

The Perils of AutoPay?

Yea.

First things first. I am a big fan of making as many things as I can in my life “automatic”. If it’s something that I will need to pay and keep paying, it’s probably on autopay.

Concrete examples of this would be things like mortgage payments and student loan repayments. Also in this tier would be things like 401k and 529 contributions. I also add in our credit card bill here as well. Car payments, if you have them, would also be in this section. Essential insurances such as car insurance and home-owners insurance are also in this category as well as your electricity bill and HOA fees. These are the first priority and should be paid every month no matter what.

In this next category are the things that are almost essential, but not quite as necessary as the above. Things in this section would include life insurance, disability insurance, etc. In this section also go the kid’s extracurricular activities, like swimming, dance, soccer, and baseball. While not essential, we’d be aware of missing any of these activities.

In general, you can’t go wrong really with putting those things above on autopay. Those aren’t likely to see any significant changes, and missing a payment can be very costly.

Now then, where are “The Perils of Autopay”?

Quite simply, it’s the things you put on Autopay that you forget about. They are in the “wants” but not “needs” category. Since you don’t “need” it, you may forget you have it if you don’t use it.

Life changes can happen a lot, and you may forget you had something on auto-pay that you don’t use anymore. Or, something changed and you never updated your payment plan to utilize a newer (better) deal and have been overpaying for long time for the same service.

Like what?

Well here are two personal examples of mine:

Our cell phone bill is on autopay.

It’s been on auto-pay since we shared a phone plan for probably the last decade or so. In general I’m happy with Verizon. I do realize that is an expensive provider, but my wife and her family really like the service. Also, whenever we travel to see family in California or New Jersey (or anywhere), we’ve never had a problem with cell phone reception.

That’s all well on good. I’ve even updated our plans to the unlimited plans a few years ago and we’ve been pretty happy with it overall. However, back when I was working in Rhode Island, I got a pretty nice 20% discount through the hospital I worked with. Then when we moved here, I was able to get the 15% Federal Employee Discount instead.

Great right? Well, I decided to go through our accounts the other day and I realized I didn’t get the Federal Employee Discount recently To be honest, I’m actually not sure how long I haven’t been getting it. I would hope it’s only been a few months. Apparently, I need to validate my email address ever year in order to get the discount — and failed to do so this year.

Unfortunate.

Anyways, I’ve done it now, and plan to be more vigilant about it every year from now on. Makes me sad that I lost money.

Our cable bill is on autopay

This one was kind of bad.

We got the cable/internet/phone package when we moved into our house almost 4 years ago. At the time they were running a pretty nice package deal. Of course, like all package deals, the “introductory offer” ran out so we just continued to pay at the “normal rate” after that. I was aware of this and was ok with it.

However, like above, I was checking on these autopay accounts and gave them a call to see if I could get a better deal. Well, there is both good news and bad news. The good news was that I was grandfathered in on my current rate which was actually a better deal than what I would be eligible for now. The bad news is that I was paying for 2 premium channels which were free during the introductory period but were now costing me extra every month.

In other words, I could have been saving more money every month but I never removed these channels from my plan. Even worse, I didn’t even know we had these premium channels! Anyways, I had them removed and my bill is pretty good overall, but it could have been way better.

Anything else?

Yea.

Amazon Prime is on autopay

Well this wasn’t really a problem, but more of something I need to stay aware of. Amazon Prime raised their yearly price from $99 to $119. This isn’t a huge deal for me since I use Amazon Prime all the time.

However, I also have Prime Music which costs an additional $3.99 a month (single device with Prime subscription). When we first got it, I think we used it a good amount with Alexa, having dance parties in our living room after dinner. However, the kids seem to be using it less and less and I’m not sure the price tag is worth it anymore. Especially when you contrast it against Disney+ which costs $6.99/month.

I’m going to be monitoring this one, but I think we may cancel it soon.

Epic! is on autopay

I really liked Epic! a lot when we first got it. Lucas and Kylie would fight over the iPad at night before bedtime to read books.

However, now it is just mainly Lucas who uses the “Read to Me” function a lot. Kylie now prefers to just read her own books in her room.

I think that we may do one more month of Epic! and then cancel it. Epic! costs $7.99 a month which isn’t cheap. That said, I was very happy that it got Lucas “into reading”. However, as I’ve stated before, I think Lucas has made it through nearly all the “Read to Me” books. Additionally, I plan to buy Kindle Fire HD 8 Kids for kids this Christmas anyways.

The rumor is that they’ll go on sale for $80 for Black Friday, so maybe wait until then. It might be even be like $80 for 1 and $150 for 2 or something, which I think is a huge deal.

Some may wonder, “why not buy the Kindle Fire HD 10 Kids? “There are a few reasons. However, in general, I don’t think the 2” increase in screen size and better processor is worth it for the kids for significantly more money. To be honest, I don’t see them using these for more than 2-3 years anyways, and by then I’m sure there will be some newer, better tablet.

Also, in case anyone is wondering, the Disney + app is now available on Kindle Fire through an app. Apparently there was a lot of talk about it not being available, but Amazon and Disney hashed out a deal (smart of them) to make it work.

One more thing…

Make sure you look over your credit card bills that you have on autopay.

People that steal your credit card information well usually “test” your card first with a few smaller transactions for usually less than a $10 or so. They may drag this out over weeks, months, or even years.

Or they may start increasing the transactions until you either notice (or don’t notice) or may try to buy a larger item if it goes on long enough.

Be careful out there. Check your credit card bills regularly.

My wife is a lot better about this than I am, she reminds me to look at our credit card bill together on a regular basis. Additionally, we let each other know if we see a charge that didn’t seem familiar. This helps us to keep us on our toes against scammers.

TL;DR

Life on Autopay can be perilous.

While it can be helpful, it’s still your responsibility to know where your money goes.

You may be spending money on things you don’t need anymore, never upgraded to be a better plan, or forgot to renew your discount.

Keep track of things — especially your credit card bill.

Finance Fridays Sensei

-Sensei

Agree? Disagree? Questions, Comments and Suggestions are welcome.

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