It’s 2016, and we’ve relinquished a lot of control to machines and algorithms. Maybe you’ve sold your car in favor of ride sharing programs or Lyft; maybe you’ve jumped aboard the new robo-advisor movement for your investment planning; or maybe you have opted for automation services with lots of different accounts you pay each month. This last option is the one we’re going to focus on. It’s a big convenience that’s now available to us in the modern world, but it’s one that causes a lot of problems for some people, especially when life gets busy or complicated.
Automated payments are a great way to make sure your bills always get paid. There are pros and cons to these arrangements. We’ll start with the Pros. Let’s say you automate your utility bills each month: internet, gas, water, and electric. Years ago, you used to occasionally miss a payment. You’d remember later on – perhaps a week or ten days after the bill was originally due. You’d always pay, but there was a problem. Delayed payments took their toll on your credit history, even though you always paid, eventually. Automated payments ensure that this never happens to you. Your credit will benefit from payments always being surefire, and you will never have to spend time looking up account information and moving money around.
Now for the Cons. Automated payments are convenient for you, sure, but they’re also convenient for the service providers and merchants who receive your payments like clockwork every month. This can put you in a tough spot if you ever find yourself unable to pay or – more realistically – if you stop using the service altogether and just forget to cancel the account.
This last point happens all the time. How many times have you signed up for an online service, for instance, like an entertainment site, only to cease use months down the line and keep paying for it months after that? The situation is all the worse if you are signed up for a service without your knowledge. This is the situation that lots of people in the United Kingdom found themselves in with Payment Protection Insurance, or PPI for short.
Insurance companies conspired to hide PPI agreements in loan documents all over Britain. Thousands of people signed up for the service without realizing they were doing so. When payments started to come in weeks later, some people noticed immediately and either cancelled the service or filed PPI claims. Those were the lucky ones. Hundreds of other people kept paying for PPI for months or years, never noticing all the money streaming out of their bank accounts.
Automation means that situations such as these work their way into our bank accounts all the time. You may not realize that payments are being drafted from your accounts all the time, whether or not you signed up for them knowingly. It’s altogether too possible to pay for ongoing payments for disused services. In either case, it’s important to occasionally check your bank account for payments you don’t recognize, and to cancel any automatic payments that you no longer need.