Auto pay with bank accounts - is it safe?

[Wolfpack Mustachian]

Verizon has started only allowing auto pay to save money if you use a bank account or their specific credit card.

Does anyone have any experience of auto paying from a bank account directly? I've always used a credit card or debit card intermediary because it felt risky, but maybe it's not.

[birdie55]

I have been paying ALL my monthly bills from my checking account for maybe 30 years.   I find all of the various vendors will email ahead of the withdrawal with the date and amount of the withdrawal.  That gives you time to contact them if you find an issue.

I started off opening a separate checking account just for these withdrawals, but never had an issue. 

[TMB]

It's generally safe.  As far as data breaches go, the businesses likely already have your info on file somehow from previous payments.

As far as the businesses requesting incorrect amounts, it isn't really any different than what you are doing already.  If you are more concerned, you can create a secondary bank account you fund just for these automatic debits. 

Assuming you are in the US, there are moderate protections for incorrect withdrawals from bank accounts (and my understanding in Europe is even more pro-consumer). 

[Catbert]

For 20+ years I've always had mortgages and utilities on auto pay.  Even credit cards I have set up to auto pay the minimum payment.  I want to force myself to review credit card statements and pay the balance, but like ensuring that no matter what happens I won't have a late payment.  I've never had a problem.

If Verizon is your only question, their credit card isn't bad.  4% on grocery/gas.  3% on dining. 2% on Verizon 1% all else.  This money earned can only be applied to your bill.    You also get 2 free days of international calling each year from this no-fee card.   

[SunnyDays]

I've been paying all my utility bills by auto withdrawal from my chequing account for more years than I can remember and have never had a problem.  I get a regular bill that states how much is being withdrawn and when.  It's the easiest thing in the world.

[HPstache]

All they have is your routing number and bank account number, right?  If someone was able to get this information from a data breach or wheatever, it would be the same as receiving a check from someone... you have their routing and bank account number, it's listed at the bottom, but can you do with that?

[Wolfpack Mustachian]

Thanks everyone for the information! I imagined it was more of a mental hang-up than anything, but it's nice to see confirmation.

[reeshau]

All they have is your routing number and bank account number, right?  If someone was able to get this information from a data breach or wheatever, it would be the same as receiving a check from someone... you have their routing and bank account number, it's listed at the bottom, but can you do with that?

You can set up a bill pay for someone else.  This happened to me.  I believe someone took my routing and account number from a physical check, but Dec 2018 I had a raft of "auto withdrawals" show up in my account.  I do online bill pay, but I do it as "don't call us; we'll call you"--from my bank, not from the billers.  Called the bank, then filed a police report.

What really sucked is I had just written a bunch of charity checks foe the holidays, and of course the bank prize the account.  So, had to contact all of them to warn that the checks would bounce and why, and send them new ones.  The bank did reimburse me, but there is not the same regulatory requirement ad with a credit card.  (Of course, I would have thrown a fit, moved my business, and told everyone I knew if I was left high and dry)

Interestingly, as soon as the sheriff's department heard I was reimbursed, they closed the case--since I was no longer harmed.  Of course, I was out a ton of time.  The irony is this was literally other bills: Comcast, electric utility, etc.  OK: call them, subpoena if you have to, and get the service address that was paid.  Follow that trail back to the perp.  Seems doable, but low priority.  Nothing done, that I ever heard of.

[TMB]

...

Interestingly, as soon as the sheriff's department heard I was reimbursed, they closed the case--since I was no longer harmed.  Of course, I was out a ton of time.  The irony is this was literally other bills: Comcast, electric utility, etc.  OK: call them, subpoena if you have to, and get the service address that was paid.  Follow that trail back to the perp.  Seems doable, but low priority.  Nothing done, that I ever heard of.

Sadly, this is basically the rule.  Even without reimbursement, getting local police involved is hard.  However, it is still best to try to involve them if for no other reason than your bank/credit card company tends to pay more attention to someone who's filed and obtained some type of police report.  It also may help litigation if it comes to that. 

[G-dog]

I have been paying ALL my monthly bills from my checking account for maybe 30 years.   I find all of the various vendors will email ahead of the withdrawal with the date and amount of the withdrawal.  That gives you time to contact them if you find an issue.

I started off opening a separate checking account just for these withdrawals, but never had an issue.

Same here - maybe even for 40 years (not all my bills, but anything I could, and as more vendors accepted it, I switched to autopay). I think autopay helped me retire early. 

[reeshau]

Interestingly, as soon as the sheriff's department heard I was reimbursed, they closed the case--since I was no longer harmed.  Of course, I was out a ton of time.  The irony is this was literally other bills: Comcast, electric utility, etc.  OK: call them, subpoena if you have to, and get the service address that was paid.  Follow that trail back to the perp.  Seems doable, but low priority.  Nothing done, that I ever heard of.

Sadly, this is basically the rule.  Even without reimbursement, getting local police involved is hard.  However, it is still best to try to involve them if for no other reason than your bank/credit card company tends to pay more attention to someone who's filed and obtained some type of police report.  It also may help litigation if it comes to that.

Yes.  My bank would not reimburse me without a police report number.

[BlueHouse]

There are two different types of auto payments with bank accounts.  I call these push vs. pull transactions


1. Push: Electronic payment (automatic or otherwise):  YOU determine who, when, and how much to pay.   These are like e-checks.  You can turn this off at any time by logging onto your bank and stopping the next transaction. 

2. Pull: Auto-Debit: You give permission for another party to debit your account on their schedule, and assume they are doing what you've agreed with them.  In order to stop this, you have to contact the business and have them agree to stop debiting your account. 

The difference is that if you no longer want to do business with a company, it can be hard to stop the auto-debits.  If there is an error or a disagreement, you are out the money until the problem is resolved.  When I have a disagreement about my money, I want the money in MY pocket until the problem is resolved.  And when it's in my pocket, companies are much more willing to discuss the issue. 

I have been using Automatic payments out of my checking account for years, but I hate giving anyone else access to my account.  So when companies are now requiring this, I started using a separate checking account that I only use for auto-debit and a few other things.  If there is any problem, dispute, etc with that account, I will have no problem shutting it down and opening an account elsewhere.  But my main checking account would be a total pain to do that with. 

[travel2020]

Until recently, the only parties that had auto-debit pull setup on our account were the mortgage bank and a direct pull from a brokerage account. For everything else, it’s a charge to credit cards that get paid off monthly using the push method

But I recently switched our credit card and bank statements to paperless due to the increasing incidences of mail theft and missed a credit card payment as I always replied on the paper statements to track payment due dates, etc.. Since then, I’ve reluctantly setup auto-debit with the credit card companies.

What raised some flags for me in the process was the permissions you have to grant to the company making the connection between the bank and the credit card company  (plaid I think). As part of the process, you have to give access to the transaction history, and account balances. Aside from being intrusive, surely this gets used to sell more services to you.

[crocheted_stache]

I use a "pull" from my checking account for utilities and for government things that would charge a fee or don't accept credit cards: tax payments, vehicle registration, etc. Also car and house insurance.

I used to use a "push" from my checking account for the fixed-rate mortgage, before we paid it off.

I use a "pull" from my credit card for phone and Internet. CapitalOne has the ability to create virtual cards, which I use for most online purchases, and which I'd absolutely use if I were signing up for the trial period for something I suspected might be challenging to cancel later.

In addition to being fairly selective about who gets account number and routing info, on the rare occasion that I mail a check anymore, I walk it all the way into the post office. There's been mail theft in the area, and I suspect that check information is one of the things thieves steal.