Avoiding late fees is an automatic choice
Automating payments is one of the best ways to keep in control of your finances, experts say.
Setting up direct debits for expenses including mobile phone, power and insurance bills can remove any chance of missing payment dates.
Crown Money Management’s chief executive officer Scott Parry says “the secret to wealth is automating it”.
“The most important thing with direct debits is to review them regularly to ensure you are not stuck paying for things you don’t use,” he says. “Link it up to a debit account because with a credit card you don’t feel the pain like you do when payments come out of your cash accounts.”
Many utility companies reward customers with double-digit percentage discounts if they have automated direct debits set up.
Financial comparison website Mozo’s spokeswoman Kirsty Lamont says direct debits also rule out any chance of being stung with late fees for bills not being paid on time.
“Make sure you are avoiding late fees for things like your monthly electricity or gas bill,” she says. “In addition to making repayments on time and not having your credit score impacted by paying late you can also get discounts from some providers”.
To set up direct debit, customers must provide their bank or card details to the provider so the money owing can be withdrawn on the due date.
But if the automated payments are set up to a debit account make sure there are sufficient funds in the applicable account at all times to avoid being hit by your bank with overdrawn fees.
Lamont says the key is “timing direct debits to when you know you’ll have enough money in your account, so set them up for the day after you’ve been paid”.