At Experian, one of our priorities is consumer credit and finance education. This post may contain links and references to one or more of our partners, but we provide an objective view to help you make the best decisions. For more information, see our Editorial Policy.
In this article:
If you're looking for a way to make sure your credit card payment is made on time each month, enrolling in autopay can help. Autopay is a feature offered by many credit card issuers, lenders and service providers that allows you to schedule automatic payments from your bank account. Here's what to know about autopay, the pros and cons and how to set it up for your credit card.
What Is Autopay?
Autopay allows you to authorize your credit card issuer to withdraw a specific payment from your checking or savings account on a scheduled date each month. Once you're enrolled, payments are processed without extra action on your end.
You can typically choose to pay:
- The full statement balance
- The minimum payment
- A fixed amount
Many card issuers schedule autopay for your due date and some allow you to choose a different date. If your due date falls on the weekend or a holiday, the payment may be adjusted to the next business day with no late fee.
You can still make manual payments if you're enrolled in autopay. In many cases, your issuer will adjust your upcoming automatic payment based on what you've already paid. For example, if your scheduled autopay is $400 and you make a $100 payment, the automatic withdrawal may be reduced to $300.
If you pay off your balance before the scheduled withdrawal, many card issuers will reduce or cancel that month's payment. Check with your card issuer to learn how they handle early payments.
If you don't have sufficient funds in your bank account when the autopay processes, the payment may be returned for insufficient funds. This could result in a returned payment fee or late fee. Or, if you have another linked account, your card issuer may attempt to withdraw the payment from that account.
Pros and Cons of Autopay
Exploring both the benefits and potential drawbacks of autopay can help you decide whether to take advantage of the feature.
Pros
Helps prevent late payments: Scheduling your payment automatically on or before the due date can help you avoid late fees, penalty APR and negative credit reporting. This can help especially when life is busier or more stressful.
Supports positive payment history: Since payment history is the most important factor in your credit score, making consistent on-time payments can help you build and maintain strong credit.
Saves time and simplifies bill paying: Autopay reduces the need to manually track due dates, which can be helpful when you manage multiple bills each month.
Cons
Increases overdraft risk: If you don't have enough in your bank account to cover the scheduled payment, you could face returned payment fees or overdraft fees.
Presents unpredictable payments: The minimum payment changes based on your balance and interest rate, so your payment amount could fluctuate from month to month if your autopay is set for the minimum.
Potentially lowers spending awareness: Automating payments may make it easier to overlook rising balances if you're not regularly reviewing your statements.
Tip: If you have irregular income, monitor your bank balance closely before your scheduled withdrawal date to ensure you have sufficient funds available.
How Does Autopay Affect Your Credit Score?
Autopay can help protect your credit score by supporting a positive payment history. Since payment history carries the most weight in your credit score, avoiding late payments is critical. Using autopay can help you avoid missing a payment with minimal effort since payments are made automatically.
If you only pay the minimum and carry a high balance, a high credit utilization ratio could negatively affect your score. On the other hand, setting autopay to pay your full balance each month can help keep your balances and your credit utilization in check. A lower credit utilization typically supports a higher credit score.
Learn more: Should I Set Up Autopay?
How to Set Up Autopay
Setting up autopay only takes a few minutes and can be done conveniently from your phone or computer.
- Log in to your credit card account. Use your card issuer's app or website to log in to your account.
- Select the autopay option. Navigate to the payments or billing section and look for "Autopay" or "Automatic payments."
- Select your payment amount. You can typically choose between paying the minimum payment, statement balance or a fixed monthly amount. The minimum payment is a good option for simply ensuring your payment is made each month.
- Choose your payment date. Many issuers use your due date by default, though some allow changes.
- Enter your bank account information. Linking an account is typically simpler if you're choosing a checking or savings account with your card issuer. Otherwise, you'll have to provide your bank routing and account numbers to link a checking or savings account.
- Agree to the terms. You'll typically be asked to confirm the automatic payment, including the bank account, amount and monthly payment date. After confirming, you're enrolled.
After enrolling, monitor your account to ensure the first payment processes successfully.
Tip: If you need to change or cancel autopay, make updates several business days before the scheduled payment to be sure it takes effect in time.
Tips for Using Autopay
Setting up autopay is the first step. Here are some extra steps that can enhance the benefits you get from using the feature.
- Pay at least the minimum. This helps you avoid late payments and ensures your account remains in good standing.
- Match your autopay date to your cash flow. Adjust your payment amount or due date if there are changes to your payday or due dates of other bills.
- Review your statements. Regularly check your account to make sure your payment is posted on time and for the correct amount, and that it's applied to your balance.
- Make sure your bank account has enough funds. Check your bank account leading up to the autopay date to be sure the payment won't overdraft your account. Don't forget to take into account pending transactions or autopayments scheduled around the same date.
Frequently Asked Questions
Is Autopay Safe?
Autopay is generally safe when you set up through your card issuer's secure online platform. Electronic transfers are encrypted and regulated. If you notice unauthorized withdrawal, you can dispute the transaction with your bank or credit card issuer.
How Long Does Autopay Take to Process?
The bank transfer typically settles within one to three business days. During this time, the bank account may show the withdrawal as pending, but your credit card issuer will credit your payment on the date the payment is initiated.
What Happens if You Pay Before Autopay Processes?
Most credit card issuers reduce the autopay amount based on payments you make before the automatic withdrawal date. For example, if your scheduled payment is $150 and you make a $50 payment, autopay will withdraw the remaining $100. If you pay the full statement balance, autopay may be cancelled for that month. Note that you could end up double-paying if you make a payment after autopay is initiated.
Before making a payment ahead of your autopay, review your card issuer's policy before making a manual payment close to your due date.
The Bottom Line
Autopay can help you stay on track with credit card payments and avoid expensive late fees. Consistent, on-time payments can help you build your credit score. Make sure to review your statements and monitor your bank balance. After you're enrolled, you can check your credit scores for free to see how your payment history is affecting your credit.