Question

What benefit is associated with using automatic withdrawals for bill payments?

- a) Avoidance of late payments and fees
- b) Increased chances of discounts
- c) Improved credit history
What is a potential consequence of using automatic withdrawal for bill payments?
- a) Risk of overdraft charges
- b) Enhanced account security
- c) Higher credit scores with regular payments. What precaution is essential when using automatic payments to avoid issues?
- a) Regularly monitor account transactions
- b) Rely on overdraft protection
- c) Increase automatic payment amounts

Answer 1

Benefits of automatic withdrawals include avoiding late payments and fees. A key precaution is regularly monitoring transactions to avoid overdraft charges.

Step-by-step explanation:

One benefit of using automatic withdrawals for bill payments is avoidance of late payments and fees, as it ensures bills are paid on time. However, a potential consequence of utilizing automatic withdrawal is the risk of overdraft charges if the account does not have sufficient funds. An essential precaution when implementing automatic payments is to regularly monitor account transactions. This can help manage funds and avoid overdrafts. Balancing your checkbook and keeping track of your cash flow are key to preventing insufficient funds and subsequent fees. Remember that bank accounts are a secure way to manage your finances, backed by the FDIC for insuring deposits up to $250,000, offering both safety and access to your money.