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How to Use Autopay with Credit Cards

Tackling money problems is something to which we can all relate. While most of us are familiar with the concept of autopay, not everyone takes advantage of this convenient option. Autopay, or automatic payment, is an excellent payment and personal finance tool for credit cardholders for a variety of reasons. Here’s why you should consider using autopay, how to use it effectively, and how automatic bill pay options can protect your credit score.

What is Autopay?

Autopay is a “set it and forget it” online bill pay feature for many people. After all, the whole point of setting up automatic payments is so that you don’t have to worry about remembering to make the payments yourself before your due date, right?

How to Set Up Autopay

How do you set up credit card autopay? It’s easy. Log in to your account, click on the payments tab, and choose to set up automatic or recurring payments. You can choose the amount you pay each month if you make at least the minimum payment.

As an example, let’s detail how to set up autopay with Citibank’s Citi Simplicity® Card. Setting up autopay with Citi is simple, straightforward, and takes just minutes:

  • Log in to your Citi account, either at Citi’s website or through the Citi mobile app
  • Once logged in, link your bank account (either Citi or external) to your Simplicity Card. You can link your account through the following methods:
    1. Select “Payment Accounts” if you have a deposit account with Citi
    2. Select “Add a New Payment Account” if you do not have an existing Citi deposit account
  • Select how much you want to pay and when once your bank account is linked to your Citi Simplicity account. You can select by:
    1. Payment type (minimum balance due, statement balance, etc.)
    2. Payment date
    3. Payment frequency (2X per month, 1X per month, etc.)
how to use autopay effectively
Ex. How to set up autopay with Citi

Beyond the Citi example, using autopay is simple, and you can use autopay for paying your bills in three distinct ways, all of which have advantages:

Pay the Minimum Payment Due Each Month

Autopay (also known as automatic bill payment) is an excellent way to safeguard against missing payments on your credit cards or car payments, utility bills, or other bills. Setting your payment option to autopay recurring payments for your credit card’s minimum amount due can help you avoid missing payments, which can seriously hurt your credit score and incur extra fees once your grace period expires.

Missed payments stay on your credit report for years. Even one missed payment can drag your credit score down for a long time – and the better your current credit score, the more harm a missed payment does. Payment history accounts for a whopping 35% of a FICO credit score – the most crucial facet in determining your risk levels to lenders.

Just because you elect to have autopay the minimum bill due doesn’t mean that’s all you should pay, however. You can still choose to pay more manually – it’s just an excellent way to protect yourself from a worst-case scenario.

Pay a Pre-Set Amount

You can also use autopay to pay a pre-set amount each month on your credit card. This method is great for those who currently carry a balance but are looking to get debt-free.

Paying more than the minimum due is a great way to kill two birds with one stone. First, this method allows you to cover your minimum amount due to protect yourself from late or missed payments. Second, it helps you reduce your credit utilization and debt levels.

Reducing your credit utilization (or credit use) is critical because it is the second most significant factor in calculating your FICO Score. Credit usage accounts for 30% of the FICO scoring model – which most lenders use to judge credit applicants.

Choosing to pay off the debt at a set amount each month has another bonus, too. This method allows you to reduce your debt levels while still maintaining the financial flexibility to plan for unforeseen issues that may arise.

Use Autopay to Pay Your Full Statement Balance

Paying your credit card statement balance in full each month is ideal. Paying in full allows you to eliminate interest payments and avoid falling into debt. Putting your credit card bills on autopay is the easiest way to achieve these goals and give yourself the peace of mind that everything is under control.

While having 0% credit use may sound ideal, however, it actually isn’t. That’s because many lenders want to see credit borrowers actually use their available credit. For that reason, the best course of action is to aim for credit utilization of 10% or below – but above 0%.

The Autopay Hybrid Approach

Autopay plays an essential role in this credit utilization process. Set all your autopay accounts to pay the balance in full each month – except one. The one exception should be the credit card you use least – set that scheduled payment for the minimum due amount.

This autopay hybrid approach will help you in several ways:

  • Keeping your credit utilization rate low
  • Avoiding late payment penalties
  • Avoiding missed payments
  • Keeping your debt levels manageable

Conclusion

Managing your monthly credit card payments through autopay is both simple and effective. Even better, almost every major credit card issuer offers the service – with most autopay systems operating similarly.

The versatility of autopay allows you to cover the minimum balance to avoid missing it altogether or to pay down balances with additional payments each month. However, continue to monitor your accounts to avoid slipping into debt or missing fraudulent charges. Additionally,

If you have any specific questions about your card’s autopay feature, contact your card issuer by calling the number on the back of your card.

Related Article: Save Money w/ the Servicemembers Civil Relief Act (SCRA)

The information related to the Citi Simplicity Card has been collected by BestCards.com and has not been reviewed or provided by the issuer or provider of this product or service.

About: Cory
Cory Santos

Cory is BestCards.com's "Jack of all trades" and resident credit expert, covering all facets of the credit card space. Cory holds academic degrees in both the U.S. and U.K. In addition to credit cards, Cory finds that jogging, cats, and memes are essential parts of a balanced day.

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