Autopay, also known as automatic bill payment, is a feature that allows money to be automatically transferred on a scheduled date to pay recurring bills, such as mortgages, credit card, or utility bills
. Individuals can set up an automatic bill payment through their online checking account, brokerage, or mutual fund to pay their monthly bills
. Some advantages of autopay include:
- Ease of automated payment
- Ability to avoid late payments
- Potential to maintain or improve your credit score
However, there are also some disadvantages to using autopay:
- If a payment bounces due to insufficient funds, both the biller and the bank may charge fees
- Autopay may not be available from all vendors
- If the vendor is not trustworthy, your bank account information could be at risk of fraud
Autopay works by transferring funds from your checking account to the vendor you're set up to pay through the Automated Clearing House (ACH) network
. This nationwide network enables banks to transfer money electronically, ensuring that bill payments are made on time
