What is Credit Card Auto Payment & How to Automate Payment?

31 JULY, 2023

Credit cards are considered one of the most convenient financial products for making online or offline payments. Their utility goes beyond convenience in many ways, like boosting CIBIL score.

The payment history of an individual counts as 35% of the CIBIL score determination. Therefore, making a credit card payment is one of the biggest factors in achieving and maintaining a good credit score. You should look at both columns of payment on the credit card statement. It is a common practice for most consumers to pay their payments and bills via credit card. Making timely credit card bills can help you reach this percentage and can help to boost your credit score significantly. Automated bill payment is an easy way to get it done.

Automating your payments is beneficial for every of your credit cards. As long as you can maintain your bank account with the required money each month, automated payment will be the easiest way to add to your credit score.

What is Credit Card Auto Payment?

Autopay or automating makes your credit card bill payment easy. There are two scenarios to understand automated credit card bills.

You can pay your recurring bills via your credit card automatically. You need to link your bank account to your credit card account. Automated payments will be made to your account every month. You will need not do anything to pay the bill.

You can automate payment for your monthly credit card bill. It will pay the accumulated bill on your credit card simultaneously.

Benefits of automating credit card payments

Automatic bill payment is an obvious convenience for individuals and the businesses they are paying to. Autopay gives them a consistent and hassle-free mode to receive their payments. Therefore, many companies offer discounts to credit card users for automatic payments.

Avoid missed payment fees.

Credit card companies charge a fee for delayed or missed credit card EMI or payment. There are many responsibilities an individual needs to bear in day-to-day life, and it is common to forget about payments. It is more likely to miss a payment if you have many credit cards. You can reduce such occurrences by automating the payments.

If you have made the payments automatic, the card payments will go on time. You need not worry about additional costs as a penalty for missed or delayed payments. Generally, individuals apply for multiple credit cards to maximise the rewards on all purchases. The cardholder may end up slipping through the payments. It makes it more necessary to automate the payments.

Protect your credit score

Timely payments of your credit card can help you maintain a good credit history and boost your credit score. The credit card provider will record and report your timely payments to the credit bureau agencies, adding more points to your credit score. This record of timely payments is considered a primary factor in determining your score. Thus, if you set up automatic credit card payments, you can make payments on time and not worry about hurting your credit score. As a result of timely payments on your credit card, CIBIL score of the consumer will be increased.

Ensure full payment on your credit card

A credit card bill has two payment columns - the total outstanding bill and the minimum amount due. It is your choice to automate payments for the minimum amount due on your credit card or pay the entire credit card statement amount. Another option is setting a recurring payment of a fixed amount on your credit card. Ideally, most credit card holders opt to automate the full amount of payment due every single month.

Credit card debt is one of the high interest debts. If you opt to autopay the full amount due every month, it will ensure that you never get stuck with carrying a credit card bill and end up paying a high-interest amount. Of course, you should opt for full automated payment only if you are confident about the availability of the required funds in your bank account. Otherwise, it may attract a fee for bounced payments.

Simplify your financial life

By automating credit card payments, you can make your financial life easy. You can free up your time to do other important things on your to-do list instead of worrying about making timely payments each month.

How does Credit Card Auto Payment Work?

Once credit card auto payment is set with your account, the cardholder authorises the card issuer to withdraw payments from the cardholder's bank account automatically, on a set monthly date. These autopay transactions can be cancelled at any moment and financed from the same account previously used to pay the credit card payment.

Ways to Automate Credit Card Payments

Credit card issuers/banks may have different procedures to register for automated bill payment. Let us explain how consumers can set up an automated credit card bill payment facility with most banks. These are the two common ways of registering for the auto-debit facility:

Through Your Bank: You can register for an automated credit card bill facility through your bank. The consumer must complete the NACH (National Automated Clearing House) form and submit it to your bank along with a cancelled cheque. To automate the bill payment, you must choose your payment preference - the total bill amount, a fixed amount, or the minimum amount due.
Through the Net Banking Option: You can use the Internet banking service with your bank. Login to your account and choose your credit card to set up an automated bill payment facility.

Things to Consider Before Automate Credit Card Payment

Automating your credit card bill payments makes you less likely to scan your bills before paying them. But it is a good practice to avoid big concerns. It is rare, but there can be duplicate entries in your credit card statement. You should include such a review of monthly bills inhabit, even if you are automating your payments.

Most banks offer this auto-debit facility for free. If there is a charge, it will be negligible.

Thus, automatic debit saves you the time and effort you would need to put to manually bill payments every month. Credit card holders should automate the entire outstanding amount for each billing cycle. It will help you to decline penalties due to late payments and maintain a high credit score as evidence of your high creditworthiness. It will bring many credit offers at lower interest rates comparatively.

Conclusion

Setting up your credit card autopay for your bills has numerous benefits. You don't need to post several reminders when there is automatic payment. You may straighten your financial circle, prevent late payment fines, safeguard your credit rating, and guarantee full payment on your credit card.

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FAQs on Credit Card Auto Payment

Q1. Can I cancel credit card auto payment?

Yes, you have the right to stop making automatic credit card payments. The issuer can be notified via phone, email, or letter. The card issuer must halt the payments at your request. It is not necessary that you contact the recipient firm first. When you ask to cancel an automatic credit card payment, the card issuer must conduct a thorough investigation based on the specifics of each case.

Q2. Is it safe to set up credit card auto payment?

While choosing to automate credit card payment can provide convenience, it is essential to remember that autopay does not proactively check for mistakes or extra fees related to the payments. Cardholders should exercise caution and ensure the bank accounts connected to autopay have enough monthly money.

Q3. Can I change the payment amount or date for credit card auto payment?

Generally, you can change the payment amount or due date for automated credit payment. However, the flexibility may vary depending on your card issuer's terms and policies. It is advisable to contact your card issuer's customer service or refer to the terms and conditions to understand the available options.

Q4. Will setting up credit card auto payment affect my credit score?

Even though automated payments alone do not impact your credit ratings, they can help you keep a good credit history if used sensibly. You can routinely pay your monthly obligations on time, including EMIs and credit card payments.