Dubai: Automatic payments sound like a dream come true—no more missed bills, no more late fees, and no more logging into multiple accounts to send payments.
But what if that dream turns into a financial nightmare? If you’re not paying close attention, auto-pay can drain your bank account, rack up overdraft fees, and even keep charging you for services you no longer use.
How auto-pay works—and why it can go wrong
There are two ways to set up automatic payments:
- Through your bank: You schedule payments directly from your bank account, ensuring they go out on specific dates. This is great because all your payments are managed in one place, but it’s not foolproof—banks sometimes charge fees, and payments may not process if your balance is too low.
- Through your service providers: You allow creditors, utility companies, or subscription services to withdraw payments directly from your account. This is convenient, but it means handing over access to your money—and sometimes, they keep it longer than you’d like.
Either method can cause issues if you’re not actively monitoring your finances.
Beware of these auto-pay pitfalls
- Unexpected overdrafts and bank fees
Auto-pay works best for fixed bills, like rent or a car payment. But what about your credit card or electricity bill? If these fluctuate and you’re hit with a higher-than-usual charge, your account balance could drop below zero, triggering overdraft fees or bounced payments. Some banks charge as much as AED 150 per overdraft—imagine paying that just because you weren’t expecting a higher-than-normal bill! - Late fees—even when you thought you paid on time
Automatic payments aren’t always instant. Depending on your bank or service provider, payments can take a few days to process. If you set up auto-pay but don’t check how long it takes for your payment to reach the recipient, you could still get hit with late fees. Always double-check the timing. - Subscriptions that won’t let go
How many services are you still paying for that you don’t use? Gym memberships, streaming platforms, cloud storage—these can keep charging you long after you’ve stopped using them. And canceling isn’t always easy. Some companies require written requests, and others make the process deliberately confusing. If you don’t stay on top of your payments, you could lose hundreds of dirhams a year on forgotten subscriptions. - Billing errors that drain your account
What if your phone company accidentally charges you twice? Or a streaming service bills you for a plan upgrade you never requested? Billing errors happen more often than you’d think, and if you’re not checking your statements, you might not even notice.
How to keep auto-pay from hurting your finances
· Track your payments: Use a budgeting app or spreadsheet to list all active auto-payments and their due dates.
· Set alerts: Most banks allow you to receive notifications when payments are scheduled, processed, or if your balance drops too low.
· Review your statements monthly: Go through your bank and credit card statements every month to catch any incorrect or unnecessary charges.
· Know how to cancel: Don’t assume stopping payments is as easy as starting them. Research how to cancel each auto-payment and set reminders for services you might not use long-term.
· Use auto-pay selectively: Consider setting up auto-pay only for essential bills that have fixed amounts, like rent or insurance. For fluctuating bills, it may be safer to pay manually.
Bottom Line
Auto-pay can be a fantastic financial tool—but only if you use it wisely. If you’re not careful, you could be paying for things you don’t need, getting charged fees you don’t expect, or even overdrawing your account without realizing it. Stay informed, monitor your money, and make sure convenience isn’t costing you more than it’s worth!
