I have been paying my car payments using an automated phone system for two years now. This used to be free…just another way to pay. Then they started charging $5 per call. Then $8. Now, having just called to do it they are upping it to $10.
It is not just them though. My car insurance does similar things to me (charge me a fee to pay them).
WTF? Seriously! Am I the only person who thinks this is downright gouging?
Imagine going ot McDonalds and they tell you your Happy Meal will be $5.63 but then they tell you to give them another $1 for the trouble of taking your money. After all, they have to pay someone to count it all at the end of the day? Why should they bear that cost?
Now, I understand the lender in question spent money putting that automated phone system in but I doubt they did it to be nice. By offering another method of payment they may attract more customers or get paid more reliably but most importanly likely get to fire a bunch of people who have to open mail and manually read and input the info I paid (not to mention walking all that crap to a bank).
The autmoated system is almost undoubtedly cheaper to operate than a room full of people. Certainly that it was once free and THEN they started charging does not indicate to me this is a money drain for them.
IMO if you bear a cost to do business it should be rolled into the pricing of your product. If McDonalds decides they have to stay open an hour after close to count money then add up what it costs to keep employees around for that and spread the cost over everything. Asking me to give you money so you can defray the costs of counting and banking my money is pure crap.
Some might say there is no real difference except perception between handing me a cheaper product and adding a bit at the back to take my money than it is to give a more expensive product and hide it but the first is not only deceptive (I am not clear on the total cost to do business) it is likely bilking me out of FAR more money than it costs them to do their thing.
I agree. The power company does this to me. They’d be perfectly happy if I walked into an office, took a number, and wasted my time waiting to hand the clerk a check. But if I want to pay via phone (check by phone or credit card) via automated system, they charge a fee. I think it’s $5 or something. But still. It’s pretty lame.
I could drop it in the mail, but a) I never send anything by mail ever, and b) I only write checks to my landlord. All others get my debit card either online or by phone.
A money order at the PO costs about 90 cents. A stamp cost 37 cents. Send it priority and it still only costs around 4 bucks. Add tracking and confirmation of delivery for about a buck.
Still less than 10 bucks.
But do they not have direct payments from your account?
Certainly I can do all of that but what value is my time? Not so much to put a dollar value on it but to say your alternatives cost me time and effort.
To be sure their automated system is convenient for me. If by providing this convenience was more expensive for them I could see charging me an extra fee. Thing is while it is convenient for me it is convenient for them as well. They need fewer employees to process transactions (and all that entails from collecting the mail to opening it to pulling checks to manual entry of data to carrying it to a bank who then also has cost issues with the handling). If anything these places should give me a price break (bank gives a benefit to company for not unloading a truckload of checks and company passes a but back to the customers).
Naturally they are loathe to part with money so I’d be happy to get no kickback and just get the convenience. Everyone should be happy.
But nope. Some smart guy figures people PAY for convenience…not get it for free regardless of how beneficial it is to them.
Finally, this particular case is not like choosing between Target and Sears. They have my loan and unless I refinance (with penalty for early payment of course) I am pretty much stuck with them and they are effectively raising the price of doing business with them after the fact.
They can all kiss my ass (not that they care as they laugh all the way to the bank).
They’re trying to encourage you to use a method that’s more cost effective for them, like automatic credit or debit card payments.
I ran into this recently as well. I was checking out the ringtones I could order for my phone. I need to download an application to browse the library they have. I had to pay $2 to download it, then pay for each tone.
I don’t get it. What kind of encouragement is that? The fee is for using the automated service regardless of the method you pay with. They don’t give me a break for using my debit card as opposed to paper check.
Come to think of it, my car insurance provider also charges me a payment fee, but I think that’s because I pay in installments, not all at once. Even so, it’s automatically deducted from my account per pre-determined schedule. Some computer somewhere does all the work. Half the time I forget about it until I see it deducted from my account. Shoot, they automatically renew me every 6 months too and then send me an email to let me know I’m renewed. Honestly, I don’t even know if any human beings actually work there.
Any bank can do an automatic payment nowadays for car loans. Even if the loan isn’t where you have your checking account. All they need is a cancelled check for the routing number, and you’ll need to sign somethin’.
Any bank that says they can’t do that for free is a bank you shouldn’t use.
My insurance company says they can do it too. All for free.
This pisses me off, too. I’m not going to pay $5, or $7, or $10 so that they can process my payment without paper. I tell them that they’ll just have to wait for a cheque.
Hmm. I’d send them a letter along with my next bill, telling them that if they want to make payment a hassle, I can do that too. Attached would be my payment, in pennies.
It actaully takes you longer to write a check, put it in an envelope and press a stamp on it than it does to wade through a pay by phone menu driven payment system? You must write extra slow, or punch buttons extra fast.
Starting to get on your nerves? Let me see if I get this right, you’ve been paying these people monthly through a phone system for 2 years. They have been charging you from $5 to $10 per month for this option, and you continue to use it rather than write a check and pay $0.37 for a stamp.
You’ve likely given them over $50 for the use of their phone system and have to ask why they are charging money? They are charging because their customers are willing to pay!
Just a guess, but ordering on the phone means they have to have an automated phone payment system or pay a person to answer the phone and talk to you. On the other hand, they will always have to have an AR department to accept paper checks, and automatic payments on a credit or debit card don’t cost them anything.
And in the meantime, they’re probably charging enough to make a profit since suckers like the OP keep using the phone.
Now that I think about it, pretty soon they’ll probably start charging for mailing checks so they can fire most of the AR department and save some more money.
You’re absolutely right. While I don’t enjoy getting fee’d needlessly, it is, admittedly, a small price to pay to assure that my bills always get paid, a check never bounces due to an extremely hair-thin budget, and the debit comes out of my account predictably. My time is also worth something to me. Debit cards are the greatest thing since sliced bread, IMHO.
Save this $5 and a couple of other “only $5” items a month and in a few months you’ve got a $100 buffer in your account to shield you from overdraws and it’s still money you can actually use for a rainy day.
If your budget really is razor thin, the last thing you should do is give your money away. Spend a few minutes a day managing your account and you’ll never bounce a check or miss a payment, and it’s free.