Danger! Auto Pay Turn Into Over Pay

Danger! Don’t Let Auto Pay Turn Into Over Pay!

I value my time. I love learning about ways to finish work faster and gain back more time to spend on activities I enjoy. This is why I love the auto pay option to manage our bills. I can set it and forget it.

But I recently uncovered a flashing red danger in using automatic payments for our recurring bills. Over time, auto pay can easily turn into over pay. Which is why I now have a new approach to auto pay: Set It, Check It and Do NOT Forget It!

Auto Pay: Pay Attention!

Last Saturday morning I had some extra time on my hands. E was out and about and I was relaxing at home with my coffee going through our mail. Lots of junk mail, catalogs and bills.

One of those bills was a notice from SiriusXM. It said our annual subscription would renew next month and listed the amount that would be charged to my credit card (which they had on file for auto pay).

Typically, I sort mail like this into my “trash” pile. After all, I don’t need to take any action – the bill will automatically be paid. But as I said, on this particular Saturday morning I had some free time, and decided to check the expense in more detail.

This started a chain reaction that ultimately netted us several hundred dollars in less than an hour! Here’s how…

Auto Pay = Over Pay $100

The notice from SiriusXM didn’t show how much I had paid last year – only the amount being charged for the upcoming year. I decided to review our Quicken reports to see how much we paid for SiriusXM the prior year. Sure enough, the new premium was higher.

Evidently the package I subscribed to was no longer an option, so the “auto renewal” was for a different, more expensive package. I changed our subscription, and in turn reduced our annual spend by nearly $100. Or said another way: Auto Pay = Over Pay of $100.

At this point I was feeling pretty good about my results, and decided to start checking into some other bills that are set to auto pay…

Auto Pay = Over Pay $300

One of our most expensive monthly bills is for DirecTV. And since I want to maximize our reward points, I have DirecTV setup to automatically charge my credit card each month. I set it and forget it.

But, since I just earned almost $100 by checking into SiriusXM, I decided to do the same for DirecTV. I pulled a Quicken report for DirecTV and it showed our monthly amount had recently increased by $26. Next, I compared recent bills and saw that our loyalty discount was no longer being applied.

I made a simple call to DirecTV that lasted no more than 10 minutes. During this call I asked about getting our loyalty discount reinstated. She did this immediately, plus doubled the discount to $40/month. She also credited our account with a loyalty discount for the current month.

Had I just let auto pay do its thing and not checked our bills, we would have paid an extra $300 over the next year for DirecTV. Auto Pay = Over Pay of $300.  

Now, after a little bit of Quicken research and a phone call, I saved us from overpaying more than $400 due to auto pay. But I wasn’t done yet…

Auto Pay = Over Pay $500

We have a combined insurance policy covering our home and cars. Our home insurance is paid via our escrow account twice a year, and our car insurance is paid monthly via online banking auto pay. And the last time I bid out our policy was in 2015 – two years ago.

During this time we purchased a new truck, so naturally our premium increased. But I didn’t realize how much it had increased until I started reviewing our Quicken reports. What I learned made me want to kick myself for not checking it sooner.

Over the past two years our monthly car insurance premium increased by $54.59! Only $13 of the increase was a result of our new truck. This meant that our policy increased for no good reason by $41.59 a month — $499.08 a year!

Now the increase didn’t all happen at once – that would be too obvious. No, the insurance company made minor increases four different times over the past 2 years. But since I have our bills set to auto pay, I didn’t pay enough attention. Auto Pay = Over Pay of $500

Needless to say, I immediately sent a request to our insurance broker to bid out our policies!

A System to Avoid Over Paying

All in all, I had a very productive Saturday morning: Less than 2 hours of work = More than $400 Savings. And that’s not counting the savings I expect to gain by bidding out our insurance policy!

In spite of the danger of easily over paying, I still use auto pay. After all, it’s a huge time saver. But, I have setup a new system to ensure auto pay doesn’t turn into over pay! My system is super basic: I create ticklers in our family calendar.

  • I setup a tickler to call DirecTV every six months to request the latest/greatest loyalty discounts. And, since we also subscribe the NFL package, I have the tickler setup to prompt me to call DirecTV in July, right before football season starts, to access discounts specific to this pricy package.
  • I setup a tickler to check our SiriusXM renewal price next October. I actually tried to turn off auto pay for SiriusXM but I couldn’t figure out how to do it. I know I can cancel at any time, but it sure would be customer friendly if they didn’t force you into auto renewal!
  • I setup a tickler to bid out our insurance policy each January. This is 3 months before our annual policy renews. I figure three months is enough time to bid out the policy and notify our mortgage lender on change for escrow payment.

With my new “tickler” system, I hope to be writing a post this time next year with an even larger amount of $$ we’ve been able to avoid over paying. Maybe I should setup a tickler for that too 😉

Your thoughts are welcome!