Understanding Online Bill Pay

Online bill pay services are a fast, convenient, and an inexpensive way to manage your bills.

Put aside concerns about security or fraud: Online bill pay can be safer than traditional methods because mail can be lost or stolen, while online transactions are encrypted by sophisticated and ever-improving software. As long as your computer is protected with a firewall and anti-virus program, online bill payments are safe and secure.

Don’t worry about late payments, either: Bill payment online is automated, but you control the timing and amount of your payments. It’s easy to visit the bill pay website to monitor and adjust your payments. And unlike busy people, the website doesn’t forget to pay bills each month.

Most banks offer bill payment online at little or no cost. If your bank doesn’t, sites like MyCheckFree.com and PayTrust.com may work for you. (PayTrust.com charges fees because it both receives and pays your bills, making it ideal for people who travel a lot.)

To pay bills online, create your profile on the bill payment website. Add each biller’s information, how much to send, and when the payment is due. Specify how frequently you pay a bill (one-time, monthly, yearly, etc.). That’s all it takes. Each payment will be sent on your schedule until you make changes or cancel.

When a payment is due, your bank or bill pay service subtracts the payment amount from your account and sends your payment, electronically when possible. If the biller doesn’t accept electronic payments, most banks or services will print and mail paper checks.

Usually, electronic payments arrive on the date you’ve specified, while checks are mailed on that date. To help you manage your money, the website shows you when payments are pending and when they’ve been sent. Many sites let you download financial data into programs like Microsoft Money or Quicken. (Beware of fees for this, however. The cost may not be worth the convenience.)

Because online bill payment is automated, it’s easy to forget that money is debited from your checking account each time a payment comes due. Be sure to monitor your payments every week or two. Also remember that billers sometimes change due dates and amounts, so check your current statements and adjust your scheduled payments if necessary.

Although setting up and monitoring your online payments takes a little time, it’s nothing compared to the hours you spend paying these bills one by one, every month. Using an online bill pay service makes such tedious work a thing of the past.