Online bill pay has become more and more common over the last few years. I have to admit that for many years I resisted taking the plunge, and I kick myself now that I waited as long as I did.
My stubborn story
I get paid twice a month and shortly after getting paid I used to have “bill paying” night, where I’d sit down with a stack of bills that had come in since the last pay and spend the next 2-3 hours figuring out if there was enough money to pay them, writing checks, stuffing envelopes, etc. Although I like financial topics, this was not a night I looked forward to.
Meanwhile, the credit union I use for my primary banking accounts had started offering a free bill payment service to its customers. I kind of had a vague notion I probably ought to look at it, but I never really took the time to do so. I think I was concerned that it would be complicated to get setup, and I kind of had this nagging distrust wondering what would happen if my bill didn’t really get paid. Somehow by writing that physical check I guess I felt more in control.
Finally, though I gave in about 5 or 6 years ago and decided to give online bill payment a try. It did not take very long before I began to wonder why I hadn’t taken the plunge long ago. It made my life so much easier.
So what’s so great about online bill payment?
First, it was so much easier to get started than I thought it would be. I have used 3 different services now for online bill payment and found them all very simple to set up. For each “bill” you typically pay, you need to enter an address, phone contact, and account number for your account. Usually that’s about all the info you need to provide and you need only do that once to create an entry for that company. Then when it comes time pay the bill, you simply select that company, enter the amount, select the date you want the payment sent, and submit it. That’s it. Why did I think this would be complicated????
In addition to being easy it also saves me time. I used to spend a couple evenings a month “doing the bills”. Now I simply schedule the payment when the bill arrives and I’m done. It literally takes me perhaps 2-3 minutes tops.
No missed payments
If you are even a little disorganized, this can be one of the most important benefits of online bill payment. I consider myself a pretty organized person and even still I can remember a time or two that a bill got missed because I got sloppy and misplaced the statement. Since I now simply schedule the payment as soon as the bill arrives, I don’t have to worry about forgetting to pay something or misplacing a bill. I schedule the payment to be sent a few days ahead of the due date and the system sends me an e-mail when the payment is sent so I have confirmation that it was done.
First, I write a lot less checks than I used to. Honestly, if it weren’t for my tithe check I write to my church I would very seldom write a check. Many churches (including mine) now offer the ability to give online, but I still feel like there is a spiritual benefit at least to me of performing that physical act of placing the check in the basket on Sunday morning, so I have continued to use checks for that. But other than that I seldom use checks.
Second, postage can add up quickly if you have a lot of bills.
Lastly, as I mentioned in the last benefit, by scheduling the payments as soon as they come in I eliminate late or missed payments. Fees from late payments can add up in a hurry. Many credit cards have a provision that allow them to significantly raise your interest payment if you are even a day late on your payment. Late or missed payments can have a negative impact on your credit score. There are many ways you will save if you have been prone to late payments.
Personally, I have used Quicken for probably 20 years or more to track my personal finances. So when I schedule the payment online, I take a moment to add an entry in Quicken too. One of the benefits of many of these online bill payment services is that they also provide reporting capability on the bills you have paid, so you have built in records of your payment history. (That makes budgeting a lot easier!!)
Lastly, there is convenience. My bank provides an app for my phone that’s integrated to the bill pay service, so if I choose I can schedule a payment from anywhere without even being at a computer.
What about setting up auto drafting of bills?
There is another type of online bill payment that many people use and that is auto drafting. Many companies, utilities in particular, have programs that you can set up where each month they just auto draft your payment straight out of your checking account. Often times they may offer you a small discount on your bill if you pay this way.
Many people do this and it’s not necessarily a bad thing. I prefer not to do that for a couple reasons.
First, if my finances are too much on autopilot I will be tempted to put off checking my monthly statement. There is value in briefly glancing through that statement each month to make sure there aren’t new fees being applied that you don’t understand or that there hasn’t been a mistake and you are being billed for a service not received. I know even if you have the bill auto draft, you can still get a statement, but there is something about needing to schedule that payment that brings that statement to my attention each month.
Second, you need to make sure you keep a close watch on your account balances. If you keep a decent buffer in your account this may not be a problem, but if you cut things close from month to month and the electric bill ends up being more than you anticipated, you might find five other bills bouncing from insufficient funds and you suddenly have $150 in fees to pay.
I just prefer to have the control of sending the payment myself. I think there is risks that come with making the process too automated.
A time saver I should have started long ago
I now regret that I did not start using online bill payment years ago. It makes my life so much easier and all of the things that made me hesitate proved to be not a problem at all. Many banks offer this as a free service to their customers. If yours does I strongly encourage you to check it out. Even if you have to pay a small fee for the service, it might make sense for the convenience it provides you.