Is your phone provider’s autopay discount really worth it?

Autopay is easily one of the most convenient ways to pay your bills, especially if you’re like me and struggle to keep track of everything manually. Without autopay, it’s easy to accidentally miss a payment if you’re not careful. In the past, I’ve used autopay for nearly everything — from health and car insurance to utility bills, recurring entertainment subscriptions, and, of course, services like phone plans that offer discounts for autopay enrollment. While there’s much to appreciate about autopay, there’s also a dark side I’ve discovered over the years.

Is the autopay discount offered by your phone provider worth it? For many, I believe the answer is yes, but it’s essential to be aware of the downsides and take precautions. Let’s start by exploring a few potential disadvantages of autopay discounts and some steps you can take to mitigate the associated risks.

Accidental charges

Accidental or incorrect charges are more common than you might think. For example, in a recent Reddit thread, user Ok-Concentrate4461 reported being triple-charged by Verizon in one month. Another user experienced a bill attempting to charge again for the previous month, despite the account already being current.

Sometimes, these charges aren’t even related directly to your account! About a month ago (though I can’t find the source anymore), I saw a Redditor complaining about charges from an old landline account not associated with their mobile service. It turned out someone on their line had an unpaid bill from years prior, and the carrier charged it using the autopay method, regardless of whether the actual account holder had any involvement.

Even if you convince your carrier to acknowledge the mistake, securing an actual refund can be challenging. Most carriers prefer to provide bill credits rather than outright refunds. If this happens to you, insist on clarity regarding how long it’ll take to recover your money.

If you don’t actively review your bill each month, you’ll likely overlook the exact amounts deducted from your account. Autopay users are more susceptible to unnoticed accidental charges because of reduced visibility.

Less frequent review of your bill also means missing critical notices regarding fee increases or service changes. Autopay customers often fail to detect incremental price hikes, resulting in less frequent comparison shopping and potentially paying higher rates over time.

Risk of payment failure, insufficient funds, and overdrafts

Reduced visibility also heightens the risk of payment failures due to insufficient funds. While most autopay transactions are typically predictable, I’ve experienced instances — particularly with Verizon — where pull dates randomly shifted with no explanation. If a payment hits before funds are available, you could face significant issues, especially if you live paycheck to paycheck or meticulously manage your finances.

Even with overdraft protection, you might avoid an unpaid bill, but you’ll likely incur additional bank fees. Without overdraft protection, or if you’ve forgotten to update your payment method after changing cards, you risk missed payments, additional fees, and potentially negative impacts on your credit score.

Privacy and security concerns

Storing your bank or credit card details on third-party servers introduces security risks. While we’d like to trust major carriers have our backs, the reality is that security breaches happen. Autopay offers convenience and potential savings, but it’s crucial to weigh this against the privacy and security risks involved. It’s also important to consider what account you give your provider access to, as you may have a few other options, including using a credit card for better control over any disputes.

Ultimately, I still personally use autopay and find the convenience worth the risks. However, whether autopay is suitable for you depends entirely on your personal circumstances. Those living paycheck-to-paycheck face higher risks, so evaluate your financial stability carefully.

If, like me, you decide autopay’s benefits outweigh the downsides, consider the following measures to better protect yourself:

• Use a second, dedicated bank account: I personally use a primary bank for daily finances and a separate account, like Chime, solely for autopay bills. This arrangement limits your risk since the secondary account only contains enough funds to cover expected payments, making it easier to spot any discrepancies quickly.
• Consider using a credit card: If managing multiple bank accounts seems complicated, consider using a credit card with a fixed limit for autopay transactions. Disputing incorrect charges is typically simpler with credit cards compared to reversing debit transactions.
• Set a monthly calendar reminder to review your bills: Once a month, thoroughly examine your autopay transactions and billing statements. Verify all charges and account notices, promptly addressing any unusual activity or discrepancies.