paying exactly on the due date

[Oregano12345]

are there any potential issues or drawbacks by paying exactly on the due date (via my checking account EFT)? some friends tell me to pay 5 days ahead of the due date just in case something happens, whatever that means.

[disneysteve]

I would never wait until the due date to pay a bill. You can't control when that payment actually gets sent, received and posted to your account. I can almost guarantee you that if you make a habit of paying on the due date, you are going to get screwed occasionally and hit with late fees. I agree with your friends. Pay a few days in advance to avoid such issues. There is really no benefit to waiting until the last minute - only potential problems.

[marvholly]

I always pay 1-2 days in advance. There is always the possibility that either your bank or the place receiving the payment will have a computer glitch/crash. These are usually fixed fairly quickly so the couple days still means you are on time and no penalties/interest/late fees.

[Slug]

I set my accounts for auto-payment. They pay on the due date. I've never had a problem. I really don't understand why people don't automate. It doesn't stop you from checking your transactions and knowing your balance due.

[MonkeyMama]

I personally set most my bills to pay on the bill date - through my bank. Most vendors don't care and don't charge late penalties.

Exception? credit cards.

Even my mortgage company allows a 2-week grace period - no fees.

So, I tend to pay my bills on the due date, with no issue. The credit card I usually pay at least a week ahead of time - due to the nature of the beast. I can't think of anyone else who has ever charged me a late fee - even if I did pay a bill late. (No debt, but mortgage, and paid-in-full credit cards).

I personally can't stand automation. I don't pay a bill until I read the bill and decide I Want to pay it. Just more control that way. I think it's easier to resolve conflicts before payment is made, for one. Anyway, for some it may just be a personality thing. My paycheck is also not direct deposit/automated, so I rather pay my bills after I know my paycheck has been deposited. IT varies month to month - which may be the biggie for me. Automation seems like it would cause more issues if you mis-judged deposits.

[Frugal]

I agree with you, Monkey Mama. I have found so many errors in my bills over the last year, I do not go with Auto Pay except with a few utility bills where they do reliable billing/accounting. I even had one utility this year MISAPPLY my payment, and the water company sent a check I made out to them to the electric company! Crazy. They also have sent my bills to the wrong people, and not sent them on time. There have consistently been errors on about 20-30% of my bills since I have moved; therefore, I check each one carefully now, and make sure payment was also properly applied to the RIGHT place.

[disneysteve]

I set my accounts for auto-payment. They pay on the due date. I've never had a problem. I really don't understand why people don't automate. It doesn't stop you from checking your transactions and knowing your balance due.

Actually, most of my accounts are on auto-payment but it is directly through the vendor (utility company, cable company, cell phone provider, etc.). If the bill isn't paid on time, it is their fault, not mine, so they can't penalize me. That is different than setting it up through my bank, however. With the online banking, there can be a delay between when the payment gets processed and when it gets received. That's where you need the cushion of a couple of days.

[JoshuaHeckathorn]

are there any potential issues or drawbacks by paying exactly on the due date (via my checking account EFT)? some friends tell me to pay 5 days ahead of the due date just in case something happens, whatever that means.

My experience has been that it's always wise to just pay a few days in advance. It's perfectly fine to pay some vendors on the due date, and with others it can cause problems. I love to automate, especially with my credit cards, and with most of my credit card companies it's perfectly fine to set up autopay and have the bill paid on the due date. However, for some of my business credit cards, I have to actually make sure that payment is scheduled 3-5 days before the due date to make sure that it posts on time. So, generally speaking, I set up most of my accounts to pay 2-3 days prior to the due date so I don't run into any issues.

[feh]

I always schedule my CC payment (our largest bill of the month, by far) on the due date. Never had any problems.

[disneysteve]

I always schedule my CC payment (our largest bill of the month, by far) on the due date. Never had any problems.

Are you paying from your online banking or directly at the credit card's website?

[Slug]

Are you paying from your online banking or directly at the credit card's website?

Always setting the auto-pay up through the CC website and not my bank so as you said the error if there ever is one lies with them. I had that happen a couple of times with Sunday payments. They charge me a fee (I see it in Yodlee) and then reverse it a couple of days later. I never have to initiate contact.

MonkeyMama, your reply "I personally can't stand automation. I don't pay a bill until I read the bill and decide I Want to pay it. Just more control that way. I think it's easier to resolve conflicts before payment is made, for one." seems to imply one wouldn't look at their bills because you have auto-pay set up or wouldn't look before payment is made. That would be insane. Of course we auto-payers are watching. I see all transactions in Yodlee at least on a weekly if not daily basis. By auto-paying I'm probably even more diligent so I do catch problems early.

[disneysteve]

MonkeyMama, your reply "I personally can't stand automation. I don't pay a bill until I read the bill and decide I Want to pay it. Just more control that way. I think it's easier to resolve conflicts before payment is made, for one." seems to imply one wouldn't look at their bills because you have auto-pay set up or wouldn't look before payment is made. That would be insane. Of course we auto-payers are watching. I see all transactions in Yodlee at least on a weekly if not daily basis. By auto-paying I'm probably even more diligent so I do catch problems early.

I agree. I have most bills on auto-pay but I still get the bill well in advance of the date that the payment is drafted. I've got plenty of time to review the bill and correct any errors.

[MonkeyMama]

MonkeyMama, your reply "I personally can't stand automation. I don't pay a bill until I read the bill and decide I Want to pay it. Just more control that way. I think it's easier to resolve conflicts before payment is made, for one." seems to imply one wouldn't look at their bills because you have auto-pay set up or wouldn't look before payment is made. That would be insane. Of course we auto-payers are watching.

Actually, I don't think most people look at their bills at all. (Not saying that you Are *most people*).

But, anyway, that is not at all what I Was implying. I just stated that I prefer more *control* over when my bills get paid - and I did say I think it comes down to personality. I don't expect everyone to agree - just trying to shed some light on why someone wouldn't automate their bills.

If it's on auto pilot, and I end up in the hospital, I lose control of the process. To some - that may be a good thing. To me - I will get to it when I get to it. (& I suppose with no automatic deposits, I don't see automatic withdrawals quite as useful. In this scenario - I'd likely end up in overdraft if I had automatic bill payments).

[MonkeyMama]

In reply to OP, I have to add that in the paper check/mail days I tended to pay my bills when I received them. It was with electronic payments that I completely shifted gears, since generally paying them "on due date" means they will arrive at their destination on their due date. Without worrying about outside factors like the postal service (Which can be VERY slow). Since I can set the bills to pay when I receive them, it's all the same in the execution - but might as well enjoy the float. Not that it means much today, but I remember days of much better interest rates.

Because of the way EFT works - I just feel very confident in the "pay on due date" method, whereas in the past I was probably the other extreme in "pay the second I got the bill." I admit I enjoy the best of both worlds since I do the actual legwork of paying the bills far ahead of time.

[disneysteve]

If it's on auto pilot, and I end up in the hospital, I lose control of the process. To some - that may be a good thing. To me - I will get to it when I get to it. (& I suppose with no automatic deposits, I don't see automatic withdrawals quite as useful. In this scenario - I'd likely end up in overdraft if I had automatic bill payments).

That's a very valid point. I see auto-payment as a good thing. For example, we will be out of town for two weeks next month. I don't need to worry about bills coming in while we're away and not getting paid in time. But we always maintain a substantial reserve in our account. I have never bounced a check or overdrawn my account in my life. If you are someone living closer to the edge, auto-payment could cause a lot of headaches.