The audacity of charging the customer to autopay his bill
Filed under: Insurance
Automating your bill payments is possibly the best thing since sliced bread. Not only are you assured of an on-time payment, but you traditionally save the cost of a stamp and envelope too. That is, unless you want to auto-pay your State Farm Insurance bill. In order to use the auto-pay service from State Farm, a service which practically guarantees them access to my money, I have to pay them an extra fee.It's not that State Farm charges an arm and a leg for the opportunity to use their auto payment service that irks me, it's the fact that they charge me for a service that takes less of its time, resources and money to process than a paper check. Charging customers for an auto payment may have been "OK" when it was a shiny new way to make life easy for your customers, but it has become a standard free feature for most companies. It's ridiculous that companies are charging customers for the ability to pay them electronically.
While there are other options for auto-paying bills, the addition or removal of discounts on a bimonthly basis causes my State Farm bill to fluctuate, making a third party auto payment system impractical if not impossible.Rather than charge me a dollar a month just to make a profit on my payment, I'd rather these companies absorb payment processing into the cost of doing business or, barring that, hide the charge in my ever-fluctuating monthly bill. In the end, the fee that State Farm charges for using their auto-pay is small enough that I won't switch to another company because I've had great experiences with them; but it's high enough that it annoys me every month.
Hopefully State Farm and other companies realize that it's to their advantage to have my permission to charge me every month and get rid of these unfriendly and wasteful fees.
Reader Comments (Page 1 of 1)
1-26-2009 @ 10:34AM
Eric Smith said...
Please - don't be ridiculous. Your insurance company isn't charging you for the transaction - they are charging you the $1 a month because they do not have the benefit of utilizing your money for the full six months... you have denied them the interest.
Further - State Farm is the lowest (by far) of all 10 major insurance companies... so lighten up and find a better way to save $12 a year.
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1-26-2009 @ 10:37AM
Josh Smith said...
If the $1 was because of lost interest then I'd imagine they would also charge it if I made the monthly payments via a non automated method like a check which they do not.
When you say lowest do you mean in price or quality?
Thanks.
1-26-2009 @ 11:26AM
Judith said...
You know, I completely understand. In this world of automated payments and technology, should we as the consumer be given a break? I pay a convenience fee for almost all of my monthly bills totaling about $30. The fee is paid to a 3rd party who processes the payment. Convenient for who, was my question...
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1-26-2009 @ 2:31PM
grindork said...
OBAMA SHOULD ISSUE AN EXECUTIVE ORDER ORDERING ALL REAL ESTATE PROPERTY TAXES AND UTILITY BILLS TO BE AUTOMATICLY DEDUCTED FROM PEOPLES CHECKING ACCOUNTS IF PEOPLE WANT IT. THIS WOULD SAVE MILLIONS OF PEOPLE BILLIONS OF DOLLARS A YEAR, PLUS SAVE THEM GRIEF. PEOPLE NEEDLESLY PAY 10-25% MORE FOR THEIR REAL ESTATE TAXES AND SOMETIMES EVEN LOSE THEIR HOUSES BECAUSE OF MISSED PAYMENTS!
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1-26-2009 @ 4:42PM
Stephanie said...
I received a deduction on my student loans for paying automatically. Why should we not be doing everything possible to encourage responsible payment schedules?
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1-26-2009 @ 8:39PM
Alan said...
Josh,
As a State Farm Agent, I would like to contribute an explanation. Insurance policies are traditionally issued for a term of 6 months or 1 year. Your insurance is not effective without the premium being paid (exception being upon renewal where there is a grace period). Insurance companies rely on the investment gain on premiums paid as a source of revenue when things don't work out as planned (incurred losses plus the expense of running the company exceed the earned premiums). In the past (40 yrs ago or so) no one paid for their property & casualty insurance on a monthly basis. With the general progession of our economy from a savings and spend model to a borrow and spend model, people have over extended themselves and paying for things in installments has become the norm.
So if we have to hire the employees to run a monthly installment operation and purchase and maintain the equipment and office space for those employees, that represents an added cost. That is the reason for the $1.00 a month for our pre-authorized accounts and $3.00 a month for a billed account. The customer who chooses to pay the full term is not charged these additional fees for obvious reasons. State Farm has one of the least expensive monthly payment plans that I have competed with. We do not look to our monthly fees to turn a profit but to cover expenses.
Thank you for reading my comments!
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1-26-2009 @ 8:48PM
Josh Smith said...
Thanks for the detailed explanation. I wasn't aware that monthly non autopay customers have to pay $3 a month for the monthly payment.
I do still think State Farm would be better off offering a $12 discount to those who pay in 6 or 12 month increments than charging for the monthly payments.
The net is the same but for whatever reason I think consumers can get behind that idea better.
Thanks again for the insightful comment.
2-15-2009 @ 5:39AM
RD said...
What a bunch of crap. As a banker, I know what is going on here, as well as what it costs your company to administer this program. There is no way I would pay for your services, considering that the bank would do it for free. My car payment to Chase would cost me to have them take out the money automatically, so I just have the bank send them the payment,at no cost to me. Its their loss. Luckily, I have my insurance policies elsewhere, and don't have to deal with this greed.
2-11-2009 @ 6:38PM
p curley said...
I am with nationwide and they specifically do not charge a monthly fee for a direct withdrawl from my checking account. They do charge a monthly fee of $3 if I pay monthly by check Anyone who says they need to charge this is giving you a bunch of bull shit.
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2-14-2009 @ 1:43PM
Beth said...
I will stay with State Farm for one reason - they don't have a blanket "bad dog" list. They look at it on a case by case basis and whether the dog has a bite history. They are one of the few insurance agencies that condemn the deed and not the breed. I don't know if I could get rates any less expensive - I won't even check. As long as they keep this policy, they'll have me as a customer.
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3-01-2009 @ 9:26AM
Lee said...
Its not only your ins company charging the fee, but several companies I pay on line with charge a processing fee.
I agree "the audacity", why do we have to pay when we are doing the work of transferring our money as their customers to their account. I too thought paying online would be timely and save the postage, but I think I'll go back to keeping the United States Postal Service in work!
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3-04-2009 @ 10:02AM
cj said...
Costs more to handle the mail and check processing then to accept automated payments their charging for it to be easier for u
3-23-2009 @ 10:46AM
Toni said...
We need help. My insurance company has put a surcharge of $2000 on top of an increase because they say we have 6 points. This is new to us, because we have been with them for 14 years and never have we heard anything like this before. This happened on renewal 2 months ago. They stated we had 2 accidents and 1 ticket in a 3 year perior (the accidents were not ticketed and were minor-but they had to pay). Our insurance payment for 3 autos, not expensive ones is over 400/mo. Both my husband and I are 66 and retired and live on modest fixed incomes, and consider ourselves careful drivers except for these 2 "freak accidents". When we tried to find another company they wanted to charge even more--any suggestions?
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