Service providers are happy to give you the "convenience" of automated payments — primarily because it lets them reach into your wallet each and every month. But although autopay can be a valuable financial tool for some bills and expenses, for other types of payments, you may be setting yourself up for all-too-frequent fee hikes, surprise costs, and payments for services you never even use.
Those unexpected costs can hit you with a double whammy, says Jean
Ann Fox, director of consumer protection for the Consumer Federation of
America. In addition to the extra costs themselves, surprise fee hikes
can bleed your account balance dry, she says — and "if you run low in
your checking account, you can easily overdraw your account and rack up
$35 overdraft fees."
Here are five fees to drop from your automated payment list today.
Mobile Phone Bills
Perhaps the only thing more exasperating than getting your usual
sky-high smartphone bill is getting a bill that's even higher than you
expect after you've exceeded your plan's texting, phone, or data limits.
"If you've got kids, you've got to be paying particular attention to
your bills. Oftentimes, they'll download 'free' ringtones that have
monthly subscription fees buried in the terms and conditions," says
Kathy Kristof, MoneyWatch columnist and author of Investing 101. "If
you've automated that expense, you might not notice the charges for
— such as a game's additional levels, premium features, or virtual
goods — also can easily add hundreds of dollars to a monthly bill.
advertising from insurance companies has conditioned people to look for
the very best prices on home and auto insurance. And you can get great
deals — for a while. "I call them ungrateful service providers," says
Brian Preston, wealth manager at Preston and Cleveland in McDonough,
Ga., and host of the Money Guy podcast. "They give great rates to
brand-new customers, but then they'll have premium creep over the years,
because they hope you're not paying attention." Keep them honest by
shopping the rates every year or two.
down to pay water, electric, and heating bills may seem like an onerous
chore, but those bills may be the first tipoff that something's out of
whack. "If the electric bill is high, maybe it means the refrigerator in
the garage has its door open," Kristof says. Big bills will encourage
you to investigate problems early.
According to a study done by Stanford and Berkeley researchers,
most people dramatically overestimate the number of times they go to
the gym each month — in essence paying $17 a visit with a monthly fee.
"One technique you can use to save money is to pay a la carte," says
Ramit Sethi, author of the blog and book I Will Teach You to Be Rich. "It sounds crazy to buy a day pass each time you go, but that may actually save you money."
options include buying packages of passes (often found at climbing gyms
and yoga studios) or using smartphone apps to support your (free)
workout. The free Adidas miCoach app, for example, tracks the distance and speed of your runs while piping helpful coaching advice into your earbuds.
used to have a lock on the best programming, but that's changing
quickly. Instead of shelling out three figures every month to get your
weekly Mad Men fix, consider individual purchases from iTunes or Amazon.
"When you're forced to experience the pain of paying each time you
purchase a show, you might decide you don't actually want it," says
Sethi. "It can also get people out of the house and off the TV."
Still want your TV and
movie fix? You can add top-flight movies streamed over your internet
connection from Netflix for a more reasonable cost of $8 a month and
many past and current TV shows from Hulu Plus for $8 a month.