Nearly 60% of Americans Shun Automatic Bill Payments, Study Reveals

When it comes to payments, the “set it and forget it” option certainly has its allure.

Providing card or account details to a provider ensures that the service being provided — say, a utility, or streaming media (or, separately, even an outstanding bill that’s being paid over time) — continues uninterrupted.

But there are reasons why the option’s not universally embraced, and much has to do with income levels, and specifically the reliability (or lack thereof) of having funds on hand to meet those recurring obligations when they’re paid through cards or debited from bank account.

However, the data does show that, depending on where you look, the automatic option has its place. Even for certain groups, where the use of automatic payments is “lesser than” might be seen with other segments, there’s still a significant use of autopay.

Rising Costs

In the most recent paycheck-to-paycheck study that debuted on Friday (Jan. 24), titled “New Reality Check: The Paycheck-to-Paycheck Report: Struggling Consumers Go to Short-Term Strategies to Manage Higher Expenses,” there’s widespread acknowledgement that costs of all manner of everyday essentials — those aforementioned utilities, for example — are on the rise.  And there’s a widespread desire not to get behind on bills, or having to take the time to pay them, one at a time, while inputting details over and over again.

The data shows that 78% of consumers have been hit by rising costs tied to at least one essential service through the past year, such as rising electricity costs. Against a backdrop where about two-thirds of consumers and households live paycheck to paycheck, an overall 24% of the population lives paycheck to paycheck with issues paying bills.

Paycheck-to-paycheck consumers who are struggling take the most actions to manage rising bills — in other words, as they seek to triage or strategize the management of those expenses. The overall goal is to stretch cash flow. The actions run the gamut of skipping or partially paying bills (33%) over proactive steps such as negotiating rates (12%).

Where Autopay’s Making Inroads

The data shows that across our whole sample, about 41% of consumers use autopay. Top earners use the option the most, at 48.2% of those earnings more than $100,000 annually. That percentage decreases to 42.2% for those earning between $50,000 to $100,000. For consumers earning less than $50,000, there’s a dip in the use of autopay to 31%. Interestingly, baby boomers use the option the most, at 43%; Generation Z uses it the least, at 34.6%.

Struggling consumers half as likely to use autopay than their financially stable peers — and the tally is also significantly lower than the overall 40% of consumers who use automatic, recurring payments. Only 26% of consumers in this segment use autopay to pay most of their bills.

PYMNTS Intelligence has found that the most cited reason consumers give for living paycheck-to-paycheck is insufficient income to cover bills, at 35%. Other significant factors include high debt burdens, at 23%. Setting up automatic payments might mean that bills go unpaid if cash flow does not hit at the critical time needed to cover expenses.

And it’s important to note that autopay is used for discretionary expenses like streaming services (63%) but not for rent (only 22% of consumers use the option here).  The discretionary expenses are significantly less of a draw from the monthly paycheck than the essential costs of rent or car payments, to name just two — and cancelling those discretionary purchases can be and often is, a financial fallback strategy when times are tight.