5 Ways Automation Can Help You Save Money

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Our team at Student Loan Hero works hard to find and recommend products and services that we believe are of high quality and will make a positive impact in your life. We sometimes earn a sales commission or advertising fee when recommending various products and services to you. Similar to when you are being sold any product or service, be sure to read the fine print understand what you are buying, and consult a licensed professional if you have any concerns. Student Loan Hero is not a lender or investment advisor. We are not involved in the loan approval or investment process, nor do we make credit or investment related decisions. The rates and terms listed on our website are estimates and are subject to change at any time. Please do your homework and let us know if you have any questions or concerns.

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You already work hard enough making your money. So give yourself a break when it comes time to pay your debts, recurring monthly bills, savings, and retirement accounts. Who wants to keep track of all that? Automate your finances so you can set it and forget it.

Here’s a rundown of everything you can automate, along with the pros and cons of this strategy.

Pros

  • Never forget a payment. Avoid late fees, disrupted service, and hits to your credit score.
  • Set automated payments for any amount you choose. This really comes in handy for paying down big balances and building up savings.
  • Take the decision-making out of how much you pay every month. In this way, autopay keeps your financial goals in check.

Cons

  • It’s easy to forget auto payments are scheduled. If you haven’t left enough money in the bank to cover them, then that could mean insufficient funds fees, overdraft fees, late fees, and, in some cases, interrupted service.
  • You’re stuck with whatever payment amount you set up. Certainly you can make arrangements to change it, but that takes time. If you don’t realize until today that you can’t cover the payment scheduled for tomorrow, you’re out of luck.

Student loans

Automating student loans comes with a pro all its own: Most student loan servicers offer a .25 percent interest rate reduction for setting up autopay. You can set the recurring payment for the minimum monthly amount due or a higher amount if you are trying to pay off your student loans early.

Of course, if you want to pay your student loans off faster, you may not have the same amount to put toward the debt every month. In that case, set it to the minimum and then just send in extra cash as a separate payment. Just remember not to include your minimum payment in the extra payment, as that is already going to come out automatically, no matter what.

For instance, let’s say you have the automated payment set for the minimum amount of $300, and you want to pay an extra $100 this month. If you manually send $400, it’s not going to prevent the $300 from coming out automatically.

Don’t know who your servicer is? Find out.

Credit cards

Though your credit card balances may vary from month to month, that’s no reason not to automate your finances on this front, too. When you set up automated payments through your credit card issuer, you can choose to pay the minimum amount due every month or the full balance.

Alternatively, if you’re paying down a high balance — and want to pay more than the minimum, but not the full balance — you can specify a set monthly amount.

There are a couple of scenarios in which you could run into trouble:

  • You charge a big purchase to your credit card and have the recurring payment set to the full balance. That could do some damage to your bank account if you weren’t prepared to pay off that charge right away.
  • You have a high balance on your credit card that you’re paying down with a set monthly amount, but you’re still using that card, too. A big enough charge to the card could push the minimum amount due higher than the amount you have scheduled.

One solution is setting your autopay to the monthly minimum, then manually paying any extra — either to pay off the full balance or to pay down a high balance. Worst case scenario, you forget to pay the extra, but you’ll never miss the payment entirely.

The best solution, though, is never charging more to your credit cards than you can afford to pay off by the due date. Stick to that rule and you can set it to pay the full balance without worry.

Utilities and other bills

How many bills do you pay every month just to keep your household running? It may be half a dozen or more, all with different due dates that you can’t afford to forget. Fortunately, pretty much any bill you pay on a monthly basis can be automated these days:

  • Phone
  • Internet
  • Cable
  • Electric
  • Gas
  • Water
  • Trash

Be careful, though, about which payment option you choose. Only have these bills charged to a credit card if you are committed to paying your balance in full every month — the last thing you need to do is pay interest on your phone bill. Consider playing it safe and having bills like these come directly out of your checking account.

Visit the company’s website for details on setting up autopay. If you don’t find any information on the site, give them a call. If the company doesn’t offer such an option, you’re not out of luck. You can always look into setting up bill pay through your bank.

Savings

Up until now, we’ve been talking about bills for which there are consequences if you miss payments, like late fees and interrupted service. That’s not the case for savings, but that lack of urgency is the very reason you should set it and forget it.

When you manually contribute to your savings account, you give yourself an opportunity every single month to change your mind. But when you automate your savings, it takes a few extra steps to prevent that contribution from being deposited. Sure, you could dip into it if you wanted, but once it’s there it’s a tougher sell to spend it instead.

Retirement contributions

401(k)

You may already be entered into automatic retirement contributions to your 401(k) through your employer. Just keep in mind that, unless you specified otherwise, you are having the default amount deducted from your paycheck.

The default is usually around 3 percent. While that is better than nothing, it’s worth checking in each year to see if you can afford to contribute more. And remember, you’re limited to how much you can contribute every year. The 2016 401(k) contribution limits are $18,000 if you are under 50 and  $24,000 if you are 50 or over.

Contact your employer’s human resources department to make changes to your 401(k) contributions.

IRA

If you are self-employed, look into an IRA (Individual Retirement Account) as a way to automate your finances. As with the 401(k), revisit your contributions at least once a year and ensure it still makes sense for your financial situation.

Of course, IRAs come with contribution limits as well — much smaller, in fact, than those of the 401(k). The 2016 IRA contribution limits are $5,500 if you are under 50 and $6,500 if you are 50 or over.

By the way, you don’t have to be self-employed to contribute to an IRA; they can be a good supplement if you max out your 401(k) contributions.

Automate your finances, but don’t ignore your payments

Mistakes get made and when it comes to your bills, you need to catch them right away.

Pick a day every month to check all of your statements, just to be sure your payments are being made on time and for the right amounts. You can set and forget your payments, but when you automate your finances, remember to follow up.

Interested in refinancing student loans?

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1 Important Disclosures for Laurel Road.

Laurel Road Disclosures

  1. VARIABLE APR – APR is subject to increase after consummation. The variable interest rates are based on a Current Index, which is the 1-month London Interbank Offered Rate (LIBOR) (currency in US dollars), as published on The Wall Street Journal’s website. The variable interest rates and Annual Percentage Rate (APR) will increase or decrease when the 1-month LIBOR index changes.

2 Important Disclosures for SoFi.

SoFi Disclosures

  1. Student Loan RefinanceFixed rates from 3.999% APR to 7.804% APR (with AutoPay). Variable rates from 2.480% APR to 7.524% APR (with AutoPay). Interest rates on variable rate loans are capped at either 8.95% or 9.95% depending on term of loan. See APR examples and terms. Lowest variable rate of 2.480% APR assumes current 1 month LIBOR rate of 2.07% plus 0.91% margin minus 0.25% ACH discount. Not all borrowers receive the lowest rate. If approved for a loan, the fixed or variable interest rate offered will depend on your creditworthiness, and the term of the loan and other factors, and will be within the ranges of rates listed above. For the SoFi variable rate loan, the 1-month LIBOR index will adjust monthly and the loan payment will be re-amortized and may change monthly. APRs for variable rate loans may increase after origination if the LIBOR index increases. The SoFi 0.25% AutoPay interest rate reduction requires you to agree to make monthly principal and interest payments by an automatic monthly deduction from a savings or checking account. The benefit will discontinue and be lost for periods in which you do not pay by automatic deduction from a savings or checking account. *To check the rates and terms you qualify for, SoFi conducts a soft credit inquiry. Unlike hard credit inquiries, soft credit inquiries (or soft credit pulls) do not impact your credit score. Soft credit inquiries allow SoFi to show you what rates and terms SoFi can offer you up front. After seeing your rates, if you choose a product and continue your application, we will request your full credit report from one or more consumer reporting agencies, which is considered a hard credit inquiry. Hard credit inquiries (or hard credit pulls) are required for SoFi to be able to issue you a loan. In addition to requiring your explicit permission, these credit pulls may impact your credit score
  2. Terms and Conditions Apply: SOFI RESERVES THE RIGHT TO MODIFY OR DISCONTINUE PRODUCTS AND BENEFITS AT ANY TIME WITHOUT NOTICE. To qualify, a borrower must be a U.S. citizen or permanent resident in an eligible state and meet SoFi’s underwriting requirements. Not all borrowers receive the lowest rate. To qualify for the lowest rate, you must have a responsible financial history and meet other conditions. If approved, your actual rate will be within the range of rates listed above and will depend on a variety of factors, including term of loan, a responsible financial history, years of experience, income and other factors. Rates and Terms are subject to change at anytime without notice and are subject to state restrictions. SoFi refinance loans are private loans and do not have the same repayment options that the federal loan program offers such as Income Based Repayment or Income Contingent Repayment or PAYE. Licensed by the Department of Business Oversight under the California Financing Law License No. 6054612. SoFi loans are originated by SoFi Lending Corp., NMLS # 1121636. (www.nmlsconsumeraccess.org)

3 Important Disclosures for CommonBond.

CommonBond Disclosures

  1. Offered terms are subject to change. Loans are offered by CommonBond Lending, LLC (NMLS # 1175900). The following table displays the estimated monthly payment, total interest, and Annual Percentage Rates (APR) for a $10,000 loan. The Annual Percentage Rate (APR) shown for each in-school loan product reflects the accruing interest, the effect of one-time capitalization of interest at the end of a deferment period, a 2% origination fee, and the applicable Repayment Plan. All loans are eligible for a 0.25% reduction in interest rate by agreeing to automatic payment withdrawals once in repayment, which is reflected in the interest rates and APRs displayed. Variable rates may increase after consummation. All variable rates are based on a 1-month LIBOR assumption of 2.08% effective July 25, 2018.

4 Important Disclosures for Citizens Bank.

Citizens Bank Disclosures

  1. Education Refinance Loan Rate DisclosureVariable rate, based on the one-month London Interbank Offered Rate (“LIBOR”) published in The Wall Street Journal on the twenty-fifth day, or the next business day, of the preceding calendar month. As of August 1, 2018, the one-month LIBOR rate is 2.07%. Variable interest rates range from 2.72%-8.17% (2.72%-8.17% APR) and will fluctuate over the term of the borrower’s loan with changes in the LIBOR rate, and will vary based on applicable terms, level of degree earned and presence of a cosigner. Fixed interest rates range from 3.50%-8.69% (3.50% – 8.69% APR) based on applicable terms, level of degree earned and presence of a cosigner. Lowest rates shown require application with a cosigner, are for eligible, creditworthy applicants with a graduate level degree, require a 5-year repayment term and include our Loyalty discount and Automatic Payment discounts of 0.25 percentage points each, as outlined in the Loyalty and Automatic Payment Discount disclosures. The maximum variable rate on the Education Refinance Loan is the greater of 21.00% or Prime Rate plus 9.00%. Subject to additional terms and conditions, and rates are subject to change at any time without notice. Such changes will only apply to applications taken after the effective date of change. Please note: Due to federal regulations, Citizens Bank is required to provide every potential borrower with disclosure information before they apply for a private student loan. The borrower will be presented with an Application Disclosure and an Approval Disclosure within the application process before they accept the terms and conditions of their loan.
  2. Federal Loan vs. Private Loan Benefits: Some federal student loans include unique benefits that the borrower may not receive with a private student loan, some of which we do not offer with the Education Refinance Loan. Borrowers should carefully review their current benefits, especially if they work in public service, are in the military, are currently on or considering income based repayment options or are concerned about a steady source of future income and would want to lower their payments at some time in the future. When the borrower refinances, they waive any current and potential future benefits of their federal loans and replace those with the benefits of the Education Refinance Loan. For more information about federal student loan benefits and federal loan consolidation, visit http://studentaid.ed.gov/. We also have several resources available to help the borrower make a decision at http://www.citizensbank.com/EdRefinance, including Should I Refinance My Student Loans? and our FAQs. Should I Refinance My Student Loans? includes a comparison of federal and private student loan benefits that we encourage the borrower to review.
  3. Citizens Bank Education Refinance Loan Eligibility: Eligible applicants may not be currently enrolled, must be in repayment of their existing student loan(s) and must make the minimum number of payments after leaving school. Primary borrowers must be a U.S. citizen, permanent resident or resident alien with a valid U.S. Social Security Number residing in the United States. Resident aliens must apply with a co-signer who is a U.S. citizen or permanent resident. The co-signer (if applicable) must be a U.S. citizen or permanent resident with a valid U.S. Social Security Number residing in the United States. For applicants who have not attained the age of majority in their state of residence, a co-signer will be required. Citizens Bank reserves the right to modify eligibility criteria at anytime. Interest rate ranges subject to change. Education Refinance Loans are subject to credit qualification, completion of a loan application/consumer credit agreement, verification of application information, certification of borrower’s student loan amount(s) and highest degree earned.
  4. Loyalty Discount Disclosure: The borrower will be eligible for a 0.25 percentage point interest rate reduction on their loan if the borrower or their co-signer (if applicable) has a qualifying account in existence with us at the time the borrower and their co-signer (if applicable) have submitted a completed application authorizing us to review their credit request for the loan. The following are qualifying accounts: any checking account, savings account, money market account, certificate of deposit, automobile loan, home equity loan, home equity line of credit, mortgage, credit card account, or other student loans owned by Citizens Bank, N.A. Please note, our checking and savings account options are only available in the following states: CT, DE, MA, MI, NH, NJ, NY, OH, PA, RI, and VT and some products may have an associated cost. This discount will be reflected in the interest rate disclosed in the Loan Approval Disclosure that will be provided to the borrower once the loan is approved. Limit of one Loyalty Discount per loan and discount will not be applied to prior loans. The Loyalty Discount will remain in effect for the life of the loan.
  5. Automatic Payment Discount Disclosure: Borrowers will be eligible to receive a 0.25 percentage point interest rate reduction on their student loans owned by Citizens Bank, N.A. during such time as payments are required to be made and our loan servicer is authorized to automatically deduct payments each month from any bank account the borrower designates. Discount is not available when payments are not due, such as during forbearance. If our loan servicer is unable to successfully withdraw the automatic deductions from the designated account three or more times within any 12-month period, the borrower will no longer be eligible for this discount.
  6. Co-signer Release: Borrowers may apply for co-signer release after making 36 consecutive on-time payments of principal and interest. For the purpose of the application for co-signer release, on-time payments are defined as payments received within 15 days of the due date. Interest only payments do not qualify. The borrower must meet certain credit and eligibility guidelines when applying for the co-signer release. Borrowers must complete an application for release and provide income verification documents as part of the review. Borrowers who use deferment or forbearance will need to make 36 consecutive on-time payments after reentering repayment to qualify for release. The borrower applying for co-signer release must be a U.S. citizen or permanent resident. If an application for co-signer release is denied, the borrower may not reapply for co-signer release until at least one year from the date the application for co-signer release was received. Terms and conditions apply.
  7. Average savings based on 18,113 actual customers who refinanced their federal and private student loans through our Education Refinance Loan between January 1, 2017 and December 31, 2017. The calculation is derived by averaging the monthly savings of Education Refinance Loan customers whose payments decreased after refinancing, which is calculated by taking the monthly student loan payments prior to refinancing minus the monthly student loan payments after refinancing. The borrower’s savings might vary based on the interest rates, balances and remaining repayment term of the loans they are seeking to refinance. The borrower’s overall repayment amount may be higher than the loans they are refinancing even if their monthly payments are lower.
2.57% – 5.87%Undergrad
& Graduate
Visit Earnest
2.80% – 6.38%1Undergrad
& Graduate
Visit Laurel Road
2.48% – 7.52%2Undergrad
& Graduate
Visit SoFi
2.47% – 7.99%Undergrad
& Graduate
Visit Lendkey
2.57% – 6.65%3Undergrad
& Graduate
Visit CommonBond
2.72% – 8.17%4Undergrad
& Graduate
Visit Citizens
Our team at Student Loan Hero works hard to find and recommend products and services that we believe are of high quality and will make a positive impact in your life. We sometimes earn a sales commission or advertising fee when recommending various products and services to you. Similar to when you are being sold any product or service, be sure to read the fine print understand what you are buying, and consult a licensed professional if you have any concerns. Student Loan Hero is not a lender or investment advisor. We are not involved in the loan approval or investment process, nor do we make credit or investment related decisions. The rates and terms listed on our website are estimates and are subject to change at any time. Please do your homework and let us know if you have any questions or concerns.