It’s one thing to create a budget and a long-term financial plan, but what about shielding yourself from life’s unexpected curveballs?
Setting up automatic minimum payments on your credit cards is one of the simplest ways to avoid inadvertently damaging your credit score. Missed payments are one of the most common reasons that credit scores take a temporary hit, but they don’t have to be one of the most common sources of financial stress.
The magic of automation is that it keeps things off your mind and out of your hands so you can focus on the tasks that actually require your brain. Using autopay for your minimum payments lets you fall asleep with fewer worries. But more importantly, it ties your financial future to a dependable machine instead of your own occasionally unreliable memory. We’re human, and we sometimes mess up. Even if you already have an excellent credit score, this tool is a powerful addition to your financial toolbox.
Autopay is simple to use and easy to set up. Just go to your bank or credit card issuer’s website and look for a menu item related to payments. Many issuers let you schedule more than one automatic payment, so you might make a small payment every Friday towards your balance as well as the minimum payment each month, just to be sure you never miss it. Likewise, if you’ve been chipping away at a big purchase on your credit card and finally have the balance down to zero, there’s no problem letting your autopay run for a few months until you’re sure you’re in the clear.
Here is some additional advice for making sure you have a smooth experience with autopay.
- Set up minimum payment autopay as a backstop. Because of its convenience, autopay can be used as your primary method of making payments, but you’ll get the most value if you think of it as a safety net. Autopay is perfect for automatically making your minimum payment each month, which is exactly what you need to protect your credit score from ever slipping on this important factor.
- Make sure your checking account has a buffer. No matter what kind of autopay setup you choose, make sure your checking account has a healthy balance of cash to avoid overdrafts. Autopay works best when you’re able to treat it as a backburner project, something you don’t think about too often. If you’re constantly worried about having enough money in your checking account to cover your autopay, then you’re not really getting the full benefit of this effortless technology.
- Still pay more by hand to pay down debt. While autopay for your minimum payments is worth setting up, that doesn’t mean you should only make your minimum payment. Every chance you get, make additional payments to your credit balance so you can pay it down faster and reduce the amount of interest you’re paying. Every dollar you pay in interest is another dollar your debts are costing you.
- Check your statements each month, even if you use autopay. Another thing you shouldn’t assume is that autopay is a “set it and forget it” type of plan. If you’re the forgetful type, autopay might be perfect for covering your bases and protecting your credit score, but that doesn’t mean you shouldn’t check in every now and then. Set aside some time each month to review your statements and make sure you completely understand your balances and payment status.
Mistakes are a part of life, but they don’t have to be a part of your financial plan. As you know, one misstep with a payment can show up on your credit report and impact your credit score for quite a long time. The best way to protect your score, aside from some basic good financial practices, is to turn on autopay for those minimum payments and give yourself some well-needed peace of mind.