To autopay or not to autopay? It's a question that's starting to get examined. Companies like Verizon, AT&T, and T-Mobile aren't crazy about it.
In fact, they are pushing customers away from using credit cards for autopay because every percentage point they have to pay the credit card companies to process those charges is money they could be keeping for themselves.
And this move is likely to grow. Consumers Energy, which takes care of electricity for some 8 million consumers, has put an end to credit and debit card autopay also.
But, what about consumers? Finance experts say that using autopay can offer both upsides and downsides.
“Autopay offers consumers the convenience to pay and forget,” is how Felix Shipkevich, special professor of law at Hofstra University, explained it to ConsumerAffairs.
“It's essentially the modern-day gym membership subscription model, except now merchants have direct access to your funds without thinking about paying monthly bills. Essentially, seamless payment convenience seems like a win-win for consumers.”
Despite this, some potentially consequential downsides exist. “While it’s nice to not have to think about the bills you have set up with autopay, that can be a bad thing when you forget to check the balance of the accounts that your money is automatically being taken out of,” David Kemmerer, CEO, CoinLedger” told ConsumerAffairs.
“You could potentially overdraw from an account, which could then result in additional fees or penalties.”
Are you suffering from subscription fatigue?
The number of subscriptions consumers have is increasing, which can lead to autopay charges they forget about. The average U.S. consumer spends around $275 a month on a dozen subscriptions ranging from razors to heated seats in your car.
And that brings a different set of downsides into the picture. As our lives become increasingly congested with automated deductions for subscriptions, Shipkevich says a new and disturbing phenomenon is emerging: subscription fatigue.
“Consumers are finding themselves overwhelmed by the sheer number of autopay subscriptions that silently chip away at their bank accounts each month. What once promised convenience has transformed into a burdensome juggling act, leaving individuals struggling to keep track of their financial commitments,” he said.
“This fatigue is not merely financial; it extends to mental and emotional exhaustion as well, as users grapple with the constant need to reassess and reprioritize their subscriptions. That means that they may not monitor the bills as closely as they should, and therefore, unauthorized transactions or errors can go undetected.”
Subscription quicksand
The subscription quicksand is pretty deep, too. According to a recent study from Bango, 72% of Americans say there are now “too many” subscription services to choose from these days. If you’re one of those people, there are ways to take control of the situation, says TakeChargeAmerica.
The first is to audit your subscriptions. How many? What are they for? Is there overlap in a category, like multiple beauty products subscriptions? Are you using bundling to your advantage? Is there overlap in a category — such as multiple beauty subscriptions? If there is, determine the one you feel is the best value, keep it, and get rid of the rest.
“If the total number of subscriptions you receive ties up money you could be using for other things, you’re on subscription overload. To get back on track, cancel all of them and rework your budget to make progress toward your financial goals,” the Take Charge America Team says. Yes, meaning going all-in cold turkey.
'Take a break'
“Maybe you just need to take a break for a while. Many subscription services allow you to change the frequency to skip a month or change the frequency of deliveries. Taking a break can help you save money and give you the chance to use up a backlog of products," Take Charge said.
Another way to cleanse and purge the situation is to change how you pay. If you use autopay, you might not notice the charge like you would if you had the amount deducted directly from your bank account instead.
Not only will you have a better sense of how much you spend, but as a result, you might end up canceling subscriptions you don't really need, since it will affect your ready cash flow.
Photo Credit: Consumer Affairs News Department Images
Posted: 2024-01-02 12:44:19
