A credit card is a high-utility financial instrument when it comes to making payments. We can use credit cards for paying utility bills, transport, clearing debts, and much more. Often, a credit card user has to pay multiple invoices in a billing cycle. A user may miss one or two credit card bills for some reason. Missing out on credit card bills can impact the credit history. It is why people are relying on automated credit card bill payments more than ever. Read on to know how to set up automatic bill payments for credit cards.
Understanding the auto-debit facility for credit card users
For approving any payment via a credit card, the user’s permission is needed. It can include entering a passcode or PIN for approving a payment. However, some expenses can be automated and do not need any manual interference. Once an auto payment is set by the user, the designated amount will be debited from the credit limit. The user does not have to authorise an auto payment. Only a reminder will be sent to the user before the date of a pre-set payment. Automated payments have helped users to pay credit card bills timely. Setting auto payments can ensure that credit card bills are paid even when busy. However, there are also some disadvantages of automated bill payments for credit card users. A responsible credit card user will use the auto-debit facility to their advantage.
Setting up automated payments for credit cards
The procedure for setting automated payments can differ from one bank to another. Usually, there are two main procedures for setting auto payments for credit cards which are as follows:
- Some credit card issuers offer a NACH (National Automated Clearing House) form for setting up automated payments. Credit card users must fill out the NACH form and attach a cancelled cheque leaf. Users will select the auto payment options while filling out the NACH form. Users have the facility to choose between the total amount, minimum amount, or any custom amount for auto bill payment.
- Credit card consumers can use the internet banking facility offered by their issuer to set up automated payments. A user has to log in to their internet banking account and set an auto payment in simple steps.
If someone cannot set automated payments themselves, they can reach out to their credit card issuer. Credit card issuers/banks help their customers set automated payments via customer support services.
Understanding the payment options for auto-debits
The auto-debit facility allows users to pay credit card bills without any human interference. The payment options for setting up automated payments are as follows:
– Minimum Amount
For a credit card bill, there is a minimum amount to be paid by the user. A user can avoid a late payment fee by paying the minimum bill amount. The credit card balance will be maintained by paying at least the minimum due amount. Credit card users can set an automated payment for only the minimum due amount.
– Entire Amount
The autopay feature can help clear the entire credit card bill in one go. Users having sufficient funds in their account can select the autopay for the whole credit card bill. All the credit card bills will be paid automatically with this feature. However, the proof of credit card payment will be forwarded to the user.
– Custom Amount
Any custom amount can be selected for automated credit card payment. For example, consider a user that has made a big-ticket purchase via their credit card. They may choose to deduct a fixed amount for every billing cycle in such a case. Even if the minimum due amount is INR 5,000, a user may set INR 10,000 as the auto-debit feature. However, this feature is apt for users having fixed/excess funds in their accounts.
Pros of using the auto-debit feature for credit card users
With the auto-debit feature, credit card bills will be paid timely. The advantages of paying bills timely with the auto-debit facility are as follows:
- Timely bill payments with the auto-debit feature can boost the credit score.
- A good credit score can ensure the availability of funds even in dire situations.
- Users that are consistent in paying credit card bills can get an upgrade in the credit limit.
- Users don’t have to worry about missing a bill deadline with the auto-debit feature. In addition, credit card users can get their finances right with the auto-debit feature.
- Auto-debit feature can help credit card users improve their debt-to-income ratio.
- Credit card users can avoid paying the wrong figure to the credit card user with the auto-debit feature.
Even after using the auto-debit feature, users should keep a tab on their payments. Then, if there is an issue with the auto-debit, one can consult their credit card issuer.