Many of you out there may be using automatic bill payments to have your due amount deducted directly from either your bank account or credit card. While the convenience of this is undeniable, it does come with some, albeit small, risk of a mistake being made which draws more out of your account than the amount currently due.

If you are enrolled in automatic billing, this is a good article to read. A few interesting excerps:

So how often does this happen? Nacha — the Electronic Payments Association, a nonprofit association that oversees the network that automated payments travel on, says the error rate is 38 for every 100,000 bill payments. This figure counts mistakes that banks report but doesn’t include problems that consumers solve directly through the billers.

Consumers get the credit as long as they inform the bank of the problem within 15 days of receiving the bank statement with the error on it. People who miss that deadline still have recourse under federal rules, which give consumers 60 days to report the error, but the credit could be provisional at that point until the bank determines who’s responsible for the error.

The only reason I post this is because I was in the 0.038% where an error was made. Granted the error was small (less than $100) and I caught it fairly quickly, but it makes you wonder what the mistake rate really is considering many people enrolled in automatic billing probably do not compare their bill to the actual amount deducted unless the discrepancy is abnormal.

Ever since then, I have removed my enrollment from automatic deductions and instead manually pay each bill electronically. Of course, this takes about 15 minutes a month to do (which isn’t a big deal at all), but it allows me to catch any mistakes.