Credit card autopay explained

Are you tired of having to remember to pay your credit card balance or minimum payment manually each month? If so, consider asking your issuer about the autopay options they may offer.

Automatic payment options are available on many billing platforms, such as utilities, subscription services and memberships. But despite the growing prevalence of autopay, many people may still find it confusing when it comes to credit cards. Here’s what you need to know before enrolling in autopay with your credit card issuer.

What is autopay?

Automatic payments, or “autopay”, is a feature that lets you set up automatic payments from a bank account when your statement is posted.

You can set up autopay with your credit card issuer over the phone or online. The payment may come out of your bank account on the bill due date, or your credit card issuer may allow you to choose another payment date. You can discontinue the feature at any time.

The 3 types of autopay

If you decide to enroll in autopay with your issuer, you’ll likely have three options: pay the minimum, pay the full balance or pay a fixed amount. Here’s the difference between them:

1. Pay the minimum: Automatically paying your minimum can ensure that you aren’t hit with late fees if you forget to pay your bill on time. Note that only paying your minimum will cost you a lot in interest over time. If you enroll in autopay at the minimum amount monthly, be sure you’re making supplementary payments often to avoid getting into long-term debt.
2. Pay full balance: When it comes to credit cards, paying your monthly balance off in full is always the best practice. Be sure that your checking account has enough money at the time of the automatic withdrawal each month. If a payment posts to your account and you incur an overdraft, you could be hit with overdraft charges and a return payment fee from your issuer.
3. Pay a fixed amount: This can be a good debt reduction strategy if you’re steadily working to pay off a large balance because you can tackle your debt with payments that work for your budget. Keep in mind that paying anything less than your full balance results in added interest.

Who offers autopay?

Plenty of credit card issuers offer autopay, especially larger issuers like those below:

The benefits of autopay

Autopay can be great news for your wallet — and your credit. Plus, it takes the task of keeping up with your payment due dates off your plate. Here’s a breakdown of those benefits:

It’s convenient

When life gets hectic, it is easy for a payment deadline to slip through the cracks. If this happens, services like automatic payments offer backup to ensure you never miss a payment. Setting up automatic payments gives you the freedom to use your credit card and earn rewards without the hassle of remembering to pay your balance monthly.

It can help you save money

One of the most obvious benefit of setting up automatic payments is that it saves you from any late fees that may occur when you forget to pay your credit card bill. Late fees are added to your balance, meaning you might also end up paying interest on them if you let them linger. Autopay allows you to ensure that won’t happen.

It may prevent damage to your credit

Payment history is the most important factor of your credit score. Paying late even once can have a highly negative effect on your credit. Autopay can help you prevent any hits to your credit score from missed payments.

The downsides of autopay

While autopay is certainly convenient, it may not be for everyone. Before enrolling in autopay, take note of your current financial health and consider the potential downsides of autopay. Then, you can decide if now is a good time to take your eye off your charges.

You may lose track of your spending

Autopay makes paying your bills a simple process, but it also means that you may spend less time monitoring your credit card statement and spending habits. When you don’t realize how much you’re charging on your card, you might inadvertently start overspending.

You might miss fraudulent transactions

Checking your account often is also a sure way to catch any suspicious charges that may have been made with your card. It’s easy to miss fraudulent activity if you’re unaware of any new posted or pending transactions.

Overdrafts may occur

Make sure you have sufficient funds for autopay. Overdrafting your checking account is a fast way to undo the benefits of autopay. The average overdraft fee was $27.08 in 2024, according to Bankrate’s checking account and ATM fee study. And if your bank declines the transaction that would cause an overdraft, your credit card issuer is likely to charge a returned payment fee — which can be anywhere from $25 to $40, according to Experian.

The bottom line

The value of autopay depends on how you use it. If you’re looking to avoid the added fees that come with forgetting to pay your balance, autopay could be a great option for you. It’s also readily available for almost all of the best credit cards.

But, if you forget to check your credit card activity regularly, setting up autopay could lead to more problems down the road. For all its convenience, it can’t replace the important practice of diligently monitoring your accounts and spending habits.