Why Pre-Authorized Payments Aren’t Always Good
For the longest time I have had most of my monthly bills (cable, internet, cell phone, etc.) on a pre-authorized payment plan. If you don’t know what that means, here’s the low-down: you provide your payee your credit card number or bank account information, and you agree to let them charge (or withdraw, in the case of the bank account) the amount of your monthly bill. Nice and easy. I’ve always used the credit card option for this program, because I don’t like the idea of these companies having their fingers automatically in my money, you know? And I started using this program because I missed a few payments. I found it quite confusing to have the bills arrive at different times during the month, and then having them be due at different times. Setting them up as as a pre-authorized payment meant I wouldn’t have to worry about missing the due date, AND I would only have to pay one bill a month, AND I might earn some points or cash back depending on the credit card I was using.
In a post she wrote this week, Krystal talked about how she didn’t like pre-authorized payments because it meant “once you pay your invoice, you have acknowledged and agreed to the charges on the bill.”
Hmm, very interesting.
I had never thought about it that way, but I realized that she was quite right. There’s always the fine print on these types of agreements, and the fact that you might be agreeing to all the charges on your bill when the company automatically withdraws the payment is a little worrying. I was debating this week whether I should stop my automatic payments simply because I had wanted to stop using my cards completely this year, but Krystal’s post has definitely gotten me thinking. I’ll have to weigh the pros and cons again before making my decision, adding this one into the mix.
How about you, do you have any of your payments on pre-auth? Why or why not?
A friend of mine just emailed me one of your articles from a while back. I read that one a few more. Really enjoy your blog. Thanks
I’m having this issue with the 407. they keep charging me the wrong amounts. I’m trying to get the pre-authorized turned off, but it seems to be difficult. 407 sucks for customer service.
Actually that’s not quite correct. In Canada and the United States federal law states everyone has 30 days (yes 30 days not one month) to dispute charges on ANY bill, regardless if you have payed the bill or not. In California customers have an unlimited amount of time to dispute a bill. Paying a bill, automatically or manually, does not constitue acceptance of the charges. As a matter of fact, most companys will not allow you to dispute charges or services on past due services, just because there is an error on the bill does not mean you do not have to pay it, though refusal to pay before disputing does not really make sense. Generally if there is an error and you have already payed most companys will not refund you the money charged unless you’ve discontinued services, they will simply credit you on your next monthly invoice. I know this is an old post but better late then never!