Automatic bill payment occurs when money is automatically transferred on a scheduled date to pay recurring bills such as a mortgage, credit card, or utility bill.
Individuals can set up automatic bill payments through their online checking account, brokerage or mutual fund to pay their monthly bills.
The benefits of automatic bill payment include the ease of automatic payment, the ability to avoid late payments, and the ability to maintain or improve your credit score.
Disadvantages of automatic bill payments include the difficulty of canceling them, the need to keep sufficient funds in a checking account, and the possibility of chargebacks or late fees.