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Why It’s Challenging to Pay Bills With a Savings Account

Savings accounts are designed for long-term storage rather than frequent transactions. They typically lack debit cards or checkbooks, making it difficult to use them for bill payments. However, if you find yourself short on funds in your checking account at the end of the month, you might consider using your savings account. Here’s why it’s not the best idea.

Why It’s Difficult to Pay Your Bills With a Savings Account

Savings accounts are not intended for daily transactions, so accessing your money can be cumbersome. Unlike checking accounts, they don’t come with checkbooks or debit cards. You usually need to withdraw cash in person, use a cashier’s check, or transfer funds to your checking account.

Additionally, savings accounts may have transfer limits. Although the Federal Reserve lifted the six-transactions-per-month limit in April 2020, some banks may still impose fees for excessive transfers. Always check with your bank about any restrictions. If your bank enforces these limits, using your savings account for recurring bills like rent, utilities, and internet is impractical.

To pay a bill from a savings account, you must provide your account information to the payee, which can lead to issues like incorrect withdrawal amounts. There are safer and more convenient ways to handle bill payments.

3 Ways to Simplify Bill Paying

To avoid the complications of using a savings account, consider these alternative methods:

1. Pay With a Checking Account

Using a checking account is a straightforward way to pay bills. These accounts often have no fees, and you can set up electronic bill pay to automatically withdraw the amount owed on or before the due date. Ensure your checking account has sufficient funds to avoid bounced payments or overdraft fees.

2. Pay With a Credit Card

Paying bills with a credit card can simplify your finances. You can set up autopay for all your bills, then pay your credit card bill once a month. This method also allows you to take advantage of credit card perks like cash back and fraud protection.

3. Use a Prepaid Card

Prepaid cards are another option for automatic payments. You can load money onto a prepaid debit card and use it to pay bills online or in person. Be aware that these cards often come with usage fees.

Pay Bills the Smart Way

Automating your bill payments ensures you never miss a due date, which is crucial for maintaining a good credit score. Your payment history accounts for 35% of your FICO® Score, so timely payments are essential.

Consider using services like Experian Boost® to get credit for bills that don’t usually appear on your credit report, such as your cellphone bill, utilities, and even your Netflix® subscription. Automate these payments with your checking account to ensure they are always on time.

For any mortgage-related needs, feel free to call O1ne Mortgage at 213-732-3074. We are here to assist you with confidence and expertise.

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