Credit cards can pay off their balances automatically by withdrawing funds from your checking or savings accounts. If you pay with a credit card, you can either pay the minimum each month or an amount set by the card issuer. Automatic credit card payments do not require you to bank with your credit card provider. You can set them up with a chequing or savings account at any financial institution. You could, for example, designate your CIBC chequing account for automatic credit card payments if you have a TD credit card.
Setting up automatic credit card payments
It is possible to set up automatic credit card payments through your online account or mobile app with most major credit card providers. It could be feasible to do this, but make sure the terms and conditions of your credit card allow it. In spite of the differences, you only need to enter your account information, date, and how much you wish to transfer.
Set up pre-authorized debits (PADs) by calling customer service if your credit card issuer does not provide specific instructions.
Funds can be transferred from another account. You can set up recurring transfers for a fixed amount if you bank with the same financial institution that issues your credit card.
Your financial institution may also allow you to pay your credit card balances if you set up your card as a bill payee. It is as simple as searching under the payee list for your credit card provider’s name. Your credit card number would be the account number. Recurring payments can then be set up.
Despite the convenience of these two methods, you may only be able to set up transfers for a certain amount. The amount you choose as the payment may change every month, such as the minimum or entire credit card balance owed.
What to keep in mind while setting up auto payments
With automatic credit card payments, you run the risk of needing more funds in your bank account and getting hit with overdraft fees, which average $34 or the transaction being declined by your bank. Keep an eye on your bank account to ensure that you have sufficient money to pay your credit card bill. If necessary, adjust the amount. For example, set it so that the minimum payment is made. Many banks offer text alerts for to keep track of low balances.
The due date
Many card issuers allow you to select the transfer date. The best method to avoid late payments is to pick a date a few days before the payment is due. Payments are automatically processed by some card issuers on the due date. If it is on a weekend, it will be processed on the Friday before.
Scope of fraud and errors
When you don’t need to transfer money each month manually, it is easy to overlook unfamiliar charges on your statement. If you discover any incorrect or fraudulent charges, challenge them immediately, even with automatic payments.
The due amount
Most card issuers allow customers to make minimum payments, total balance payments, or fixed payments every month. Paying the minimum prevents you from being charged a late fee. Having a balance, however, means accruing interest.