(AP) -- Automatic billing can help payers prone to tardiness eliminate costly late fees, while saving them time and the cost of postage. Generally free, these services also make sense for people who feel they spend too much time writing and mailing checks.
Arranged separately by each company, automatic payment can be linked to a bank account or credit card. Experts say the financial and privacy risks to individuals in authorizing established companies to deduct payment directly from their bank accounts are minuscule.
Susan L. Robertson, a senior vice president of the Federal Reserve Bank of Atlanta, says it "works really well for repetitive, low-value payments" and is a good alternative for people for whom the convenience of online banking is not an option.
Robertson, also a spokeswoman for the Direct Deposit and Direct Payment Coalition in Washington, said divulging a bank account number to sign up is no riskier than handing a check to a department store sales manager.
The stamps needed to mail bills may be inexpensive, but the fees companies charge late payers are not. Credit-card companies charge an average of $30 when customers fail to make minimum monthly payments on time, according to Myvesta.org, a not-for-profit Web site offering a wide range of financial services.
Many companies offer financial incentives for customers who use automatic bill pay. AT&T, for instance, deducts $1 per month for premium long-distance service customers who sign up, and Sallie Mae offers a reduced rate on student loans paid back using automatic billing.
Denver-based self-help author Judith Briles recommends automatic payment for monthly water and electricity bills, but suggests hands-on management when it comes to credit card and telephone bills, which tend to fluctuate.
