New card numbers make for not-so-autopay

This post originally appeared October 27, 2016 on as “Autopayments, though convenient, can backfire

By Barry Paperno

Dear Speaking of Credit,
We set up autopay with a credit card for several of our bills. A growing problem is our credit card number gets automatically changed by the bank frequently, like three to four times a year, because of some breach or suspicious activity. I appreciate the diligence of the bank, though we sometimes don’t get the card number changed in time with some of the companies we have autopay with. We change the credit card number as soon as we are notified of the nonpayment. Will these late payments due to the credit card number issue affect our credit score? Is there a better and safer way to set up autopayments? Thank you. – Roderick

Dear Roderick,
Three to four times a year sounds like a lot of breaches and suspicious activity! Hopefully, those problems are now behind you, and you can continue to autopay as you have in the past. Should the frequent card number changes continue, however, you’ll want to know that:

  • Late payments resulting from card number confusion can affect your credit score.
  • Yes, there is a better way to make payments under such circumstances.

Late payments from card number changes
Impacts to credit scores from late payments depend largely on: 1) how late a payment goes before eventually being paid; and 2) whether the late payment appears on your credit report.

Payments credited after the closing date, but before reaching 30 days late, will have no effect on your credit report or score. If a payment is made more than 30 days after the due date, it’s considered a 30-day delinquency and can affect your credit score — if reported to the credit bureau.

I say “if” reported, because many creditors won’t report a late payment to the credit bureau until it becomes 60 days late or later. They do this for two main reasons:

  • To promote goodwill. It is not uncommon for a longtime customer who has always paid on time to accidentally miss a payment.
  • To save on customer care costs. A company may not want its customer care representatives spending valuable time dealing with calls from otherwise good customers, reversing their late fees and submitting reporting corrections to the credit bureaus.

Typically, such courtesies extend only to 30-day late and not to 60-day, or worse, delinquencies. If your payment reaches the company more than 60 days late, you can expect it to appear on your credit report and damage your credit score.

Manual versus automatic payments
As you’ve found out, when making automatic payments on accounts using a credit card, it’s essential that the card number used in a transaction be correct. When, as you’ve also discovered, your lack of confidence in the automated procedure requires you to regularly intervene to ensure the card number is the most recent, it has essentially stopped being automatic and has become a manual process.

That being the case, you might as well simply switch to paying online manually. The following is a step-by-step way to change the way you pay:

  1. Make a list of all company websites on which you use this card for payment.
  2. One by one, go to each site and change the monthly payment method from automatic to manual.
  3. Note the monthly due date for each account.
  4. Use a calendar to schedule the various monthly payments according to each account’s monthly due date. Schedule the payments at least a week in advance.
  5. When a bill comes due, make a manual payment by visiting the company’s website or by using your bank’s online bill payment system.

If this sounds like a lot of work to make payments, perhaps it is. And as long as you keep using this card with the ever-changing account numbers, all of this work is likely to continue. That is, unless you want to make your life easier by dumping that card for this purpose.

Change cards
If you have another card you can substitute, consider doing so. If you don’t already have another card, consider opening a new credit card account. With a good credit score, you should have your choice of unsecured cards that include rewards programs and other perks. But if your credit score has taken a beating by the missed payments thanks to these card number changes, you could have trouble obtaining approval and may need to look toward opening a secured card.

A secured card can replace the existing card without giving up any convenience or benefit to your credit score as long as you have the cash on hand to place a security deposit with the card company in the amount of the credit limit. Secured cards don’t require a high credit score for approval, and when reported to the credit bureaus they have the same credit scoring impact – good and bad – as unsecured cards.

Lastly, if you do add a card, you can help your credit score by keeping the existing card with the changing account number open and active via small charges that are paid off each month before interest accrues. Just make sure those payments are applied to the most recently issued account number.

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