If you are not paying your bills online, you are missing out on the convenience and ease that it offers.
A few years back, people were reluctant to pay their bills online. The aspect of online payments was entirely new, and many people did not fully trust these transactions. Performing online bill payments was seen as a loss of control over their money.
Many people were afraid that if they gave their checking account numbers to utility providers or insurance companies, what would stop the companies from overbilling them? The traditional method of stamping envelopes and writing checks seemed all too safe and familiar. It is no surprise that a vast number of people still cling on to it as the preferred method to make payments for several things.
If you are still stuck in the past paying your bills through traditional methods, that time has been long gone. People today are paying all kinds of bills through online portals, whether they are mortgages, utilities, loans, credit card payments, personal loans, and even tuitions.
Paying bills online is a safe and convenient method to manage your finances. The use of checks has declined significantly in the last ten years as more people move towards the more reliable and convenient online payment methods.
I am going to discuss everything you need to know about online bill payments, so you can also consider leveraging it to your advantage.
What exactly is online bill pay?
Online bill pay is an online platform that allows you to make your payments without going through the lengthy process of sending things through the mail or writing checks. Everything is done online. When you make a payment online, you assign where the money has to go and how much you have to pay.
Beyond that, the bank withdraws the money from your checking account, and it takes the responsibility of allocating that money to the vendor to whom it is due. This transaction takes place in a matter of minutes or even seconds.
In case the bank does not already have an established connection with the vendor you need to pay, the bank issues the paper check to the concerned party themselves on your behalf.
How does online bill pay work?
You enter a person, vendor, or company you want to pay, and the bank manages the rest electronically or through paper checks made out to the payee on your behalf. Online bill pay enables you to receive, view, and pay any number of bills for up to a year in advance of the due date, all using one platform.
Most large companies throughout the world are set up for accepting online payments now. The concerned parties can receive your funds within a day or two when you use online bill pay. Online bill pay completely removes the aspect of late bill payments and any late payment charges you might incur.
There are still some small companies and vendors who do not accept online payments. The bank's bill pay service takes on the responsibility themselves. In case there is a delay, the late payment charges will be reimbursed to you, so you only pay what was due.
Many national banks today offer the basic bill pay service free of charge when you open a checking account with them. They might charge extra for additional features like access to transactions from Quicken financial software.
Ways to make online bill payments
While you might think online bill payment is a new trend, the method has been around for two decades. Online bill pay has come a long way with innovations, enhanced security, and additional convenience. You also have several options for paying bills online. Luckily, all the methods involve just a few clicks.
Bank’s online bill pay
Perhaps, the easiest and the most accessible option you can use to make payments is the online bill pay feature that your bank offers when you open a checking account. While most banks offer online bill pay service, you should check with your bank to confirm whether you already have access to it or if you need to sign up for it.
Setting it up initially might be a little effort on your part, but it can save you a ton of headaches and time in the long run. Each bank or credit union has its own rules when it comes to online bill pay services, but here are some general things you might need to do:
- Collect the bills, including the addresses to where you mail payments and account numbers.
- Enter each payee's information into the bank's online payment platform.
- Choose when you need to send the payment to each biller.
- Select whether the payment is recurring or if it is a one-off payment.
- Set reminders that can help you track when each bill is due.
The bank's online bill pay platform is arguably the most convenient way to make payments online. It enables you to organize your bills and keep track of the due dates. You also get a consolidated view of where your money is going so you can be sure if you have enough cash available to cover each payment. You receive all the bills you need to pay and pay each one through your bank – all through a single online platform.
Paying through your prepaid debit card
Another option for you to take care of your bills is through prepaid debit cards. This is an option widely popular among people who do not have checking accounts set up. You can use a debit card for making payments almost anywhere.
You can pay for everything with your prepaid debit card, from tuition fees, utility bills to student loans. Most companies nowadays offer you the option of making your payments to them online.
When you are using your bank, you need one username and password for every payment you have to make. Using your prepaid debit card to make online bill payments is slightly inconvenient: you need to create an account with each vendor and keep track of several websites and passwords for each of them.
An advantage of setting up your bill payments to companies automatically through your prepaid debit card is that several companies offer discounts on bills for that. Of course, I will suggest that if you set up automatic payments, make sure you double-check your payments so that you can track if you are ever overbilled by mistake.
Is online bill pay safe?
One of the main concerns for a lot of people is whether online bill payment is safe. It is a valid question, considering all the news about identity theft crimes and computer hacking problems.
Online payments or online shopping entail the risk of identity theft. Banks and vendor payment portals, however, utilize bank-grade encryption to make sure your financial information is safe and secure. Using the online bill pay platform to manage your bills keeps your data like your routing number, your account number, and the details of your transactions safe from hackers.
Is online bill pay free?
Most credit unions and financial institutions do not charge you for paying your bills through their online platforms. There are, however, who do. Make sure you read the fine print so you know if there are any unexpected charges or fees attached, and you want to utilize it accordingly.
Paying your bills online saves you money
I think it is pretty clear that a significant advantage of paying your bills online, whether through online bill pay platforms or prepaid debit cards, is going to save you a lot of time. You also stand to save money and live below your means by using online payment methods.
With the traditional methods of bill payment, there is always the chance of late payments. Perhaps, you did not have the time to post the mail, or you couldn't find your checkbook, or you forgot. Online bill pay allows you to avoid all late fees by enabling you to schedule your payments well in advance.
Between all the convenience of paying all of your bills online and saving money, I think you might be able to see that online bill payments are the way to go. A slight added benefit of it all is that you will also be going greener by choosing to make the payments electronically since it eliminates the use of paper for checks and postage stamps.
With so many reasons to make a shift to online bill payments, please don't delay and try it out soon.