Amanda Peterson
April 17, 2024
• 2 Minute Read
This week's Wise Spend Wednesday tip from CreditSoup focuses on AutoPay. If you're looking to get your get your spending on track, set your bills to auto-pay. But, what is it and how can I make it work for me?
What Is AutoPay?
AutoPay is a payment option that allows you to schedule a certain amount to be deducted from your bank account at a specified time each month. This ensures that your bills are paid on time, and helps maintain a good credit mark on your report and credit score.
How To Make It Work
If you're not super good at managing money, each pay period can be a hassle if you don't know exactly how much you need for bills. There are a couple of options available to make this work:
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Option #1: Utilize a secured card for auto payments. When you get paid, dump your bill money onto a secured card. When you set up AutoPay, link the payment to that secured card.
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Option #2: Set up a separate savings account. Just like a secured card, a separate savings account for JUST BILLS works too. Transfer your bill money over to the savings account when you get paid. Then, link your AutoPay payment option to that account.
Not only will this help you build your credit, it will help you prioritize paying bills and give you a better grasp on what you have left to spend for the month.
What If I Don't Have The Cash?
AutoPay works for most bills, but not having the cash on the day it's due is understandable - especially in today's economy. Set the smaller bills to come out on their due date or before, when you know you'll have the funds to pay.
Some bills, such as your mortgage, will have a 10-15 day grace period to pay. Those bills, for instance, are ok to not set to AutoPay. Wait until you have the funds available within that grace period to pay.
Build Your Score & Clean Up Your Credit
Utilizing AutoPay is probably the best way you can begin cleaning up your credit and increase your credit score. Ensuring your bills are being paid on time is HUGE to banks when you're looking to borrow money. In fact, it makes up 35% of your FICO score.
For more information on saving money, maintaining a budget, and cleaning up your credit, keep following CreditSoup.com.
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