How do you Pay Your Bills?

“Bank failures are caused by depositors who don't deposit enough money to cover losses due to mismanagement” – Vice President Dan Quayle

Although I’m a computer programmer (or perhaps because I’m a computer programmer) I don’t trust modern technology 100%. In some ways my wife and I are Luddites, resisting (though not necessarily opposed to) new technology. We embraced cell phones only after many years and still lament the high cost. Another technology that we’ve put off adopting is automatic bill paying.

In the story, Energy Company Debits $1.28 Million From Your Bank Account, a Colorado restaurant owner had arranged for auto-pay from her bank account with the Xcel Energy Company. This worked well for many months. But recently her rent check for the restaurant bounced. She called the bank and discovered she was overdrawn by over 1 Million dollars. A billing error at the Xcel Company had charged her $1.28 Million and Auto-Pay never objected.

Fortunately this story ends happily. Xcel corrected the bill and promised to pay any overdraft charges. But if you’re caught in a similar situation with one company accidentally draining your account, you may have a dozen other checks bounce before the problem is discovered. Each bounced check could leave a black-mark on your credit history, late fees, raised interest rates, and hours of phone calls to straighten out.

Bottom Line

If you use Auto-Pay, always read your bills and double check the amount deducted. This also applies to credit cards. I’ve been doubled charged by gas stations and overcharged and falsely charged. It’s rare but you need to watch for it.

All forms of payments have drawbacks. Last year a check payment for our Discover Card got lost in the mail. Fortunately my wife keeps an eye on our balance online and noticed that our account had not been credited with payment. She arranged to pay by phone before late fees were applied.

If you elect to pay your bills with cash don’t go to this extreme: Upset With $350 Electrical Bill, Man Pays In Pennies. 170 pounds of pennies in two large duffel bags!