5 Reasons to Set Up Automatic Payments

By Grit Daily Staff Grit Daily Staff has been verified by Muck Rack's editorial team
Published on October 25, 2022

Enrolling in automatic payments for your student loans can be a wise approach for borrowers looking to manage their debt efficiently. Autopay means that your student loan payment will automatically withdraw from your account instead of being sent manually every month, which can offer several benefits, including helping you avoid late fees.

1. Never Miss a Payment

When you implement autopay for your student loan payments, you are less likely to miss a payment, or make a late payment, since you’ve already scheduled this to be taken care of automatically. Setting up an autopay reduces the risk of having to pay hefty late fees.

In addition, paying on time consistently could help your credit score, since late payments may have a negative effect on your credit report.

2. Student Loan Refinancing

Student loan refinancing may be an excellent option for some borrowers looking to lower their interest rates or shorten their loan term. Refinancing could save you a nice chunk of change over time. In addition, if you choose to refinance, your monthly payments may be more manageable, making setting up automatic payments less of a dilemma.

Student loan refinancing can be a great option for private student loan borrowers. To qualify, someone looking to refinance their student loan should have good credit, a comfortable income, and a completed their college degree. Student loan refinancing may also be an option for borrowers with federal student loans, but keep in mind that by refinancing from federal loans to private student loans, you will no longer be eligible for federal benefits and programs, such as loan forgiveness and income-driven repayment plans. Please consult www.studentaid.gov for the most current information about any federal student loan benefits.

3. Interest Rate Discount

Your lender may offer an interest rate discount when you set up autopay on your student loans. That discount is typically about 0.25% for federal loans, and for private loans that reduction can vary based on your student loan servicer.

This autopay discount may seem like a small amount of savings, but it can add up over time. For example, on a $30,000 loan with a 10-year repayment plan and a 6% interest rate, that’s still over $400 that can go back in your pocket.

4. You’ll Save Time

Autopay offers added convenience and peace of mind, which can save you time and stress. When you set up autopay, you’ll have one less task to take care of every month. It’s one and done!

5. Secure Payments and Identity Theft Protection

By setting up automatic payments, you can also help reduce your risk of identity theft. Autopay allows you to input your information once, instead of once a month, and minimizing the number of times you give out your personal information can make payments more secure. 

Bottom Line

Setting up an automatic payment system for your student loans can have many benefits, including potentially saving you time and money. And remember, there are also other ways to save money on your student loans, so make sure you explore all your options.

By Grit Daily Staff Grit Daily Staff has been verified by Muck Rack's editorial team

Journalist verified by Muck Rack verified

Grit Daily News is the premier startup news hub. It is the top news source on Millennial and Gen Z startups — from fashion, tech, influencers, entrepreneurship, and funding. Based in New York, our team is global and brings with it over 400 years of combined reporting experience.

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