4 reasons to automate your credit card payments

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This simple step can have several important benefits.


Key points

  • Automating credit card payments can help you avoid the financial consequences of a missed payment.
  • You can also simplify money management.
  • Automating payments can even help you avoid interest charges.

I have a few different credit cards that I use for different purposes, but each card has one thing in common. I have set up automatic payments so that my card balance is paid in full each month.

Whether you have one card or 20, you might want to do the same. In fact, there are four good reasons why it can be a good idea to ensure that your card payment is made automatically from your bank account each month.

1. You can avoid missed payment fees

Many credit card companies charge you a fee if you miss a payment. This can easily happen if you haven’t automated the process because sometimes life gets busy and you forget.

If you’ve made the process automatic, your payment will always get where it needs to go on time, so you don’t have to worry about incurring additional costs due to an oversight. If you’re trying to manage multiple credit cards (perhaps to maximize the rewards you can earn), it’s even more likely that a payment on one of them will end up slipping through the cracks, from so the benefits of automation can be even greater.

2. You can protect your credit score

A missed payment on a credit card will usually be reported to the three major credit bureaus if you are at least 30 days late. This can cause serious long-term damage to your credit score because a late payment stays on your report for years and payment history is the most important factor when calculating your score.

By setting up automatic payments, you’ll be sure your money is received by the card issuer on time each month so you don’t end up with a black mark on your credit history. Developing a perfect on-time payment history is one of the best ways to get a great credit score that opens the door to affordable borrowing on other bigger loans, like a mortgage.

3. You can make sure your card is fully paid

Typically, you have choices when setting up automatic payments. You can make arrangements to make the minimum payment due, to pay a fixed amount, or to pay off your full balance.

Ideally, you’ll choose to automatically pay the full amount due each month. This will prevent you from ending up with a credit card balance that comes with costly interest charges. Of course you should only if you are sure you still have the money in your bank account to make full payment. Otherwise, you could end up with overdraft fees that also hurt your finances.

Even if you can’t pay your balance in full, you can still set up automatic payments for more than the minimum amount by arranging to pay a higher fixed amount. For example, if your minimum payment is $55 but you have established a debt repayment plan that allows you to pay $100, you can automate your payment of $100 each month to ensure you stick to your plan. By paying extra, you can make further progress in paying off your loan faster.

4. You can simplify your financial life

Finally, by setting up automatic payments, you can cross this task off your to-do list and you won’t have to worry about sending your payment every month. Automating your financial life as much as possible — including credit card payments and savings — can free up your time to do other, more fun things.

For each of these reasons, you should seriously consider setting up automatic payments on your cards as soon as possible if you haven’t already.

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