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- Financial institutions and bill-pay services have online services to help pay bills.
- Online bill pay is usually linked to a checking account and offers automatic payment options.
- Online bill pay is free and may even guarantee on-time delivery with late-fee reimbursem*nt policies.
In decades past, responsible "bill-pay management" involved checking your mailbox daily for bills and paying them with paper checks in envelopes. Today, with online bill pay, you can view, schedule, and pay your bills right from your computer or phone.
That not only saves paper, but it can save you time, hassle, and money. Keep reading to learn more about what online bill pay is, how it works, and its pros and cons.
What is online bill pay?
Online bill pay is a service offered by banks and credit unions. Bill-pay services that allow you to pay your bills without writing checks. Most online bill pay is linked to a checking account. Online bill pay addresses three payment types:
- Immediate one-time payments
- Future one-time payments
- Recurring payments
Many large service providers now offer "eBills" and are able to receive payment from your bank electronically. However, for smaller providers that only accept paper checks, most financial institutions can send them on your behalf. In these ways, online bill pay could help you finally cut the checkbook out of your life for good.
Online bill pay is part of their online and mobile banking services, so similarly to other services like mobile check deposit, you won't have to worry about additional fees.
See Insider's best banks>>
Benefits of online bill pay
The biggest advantage of online bill pay is that it can help you automate your payments. Bills that are the same amount each month, like your mortgage or car payment, are great candidates for setting up a recurring payment schedule with online bill pay.
Even for bill amounts that vary from month to month, scheduling payments in advance can help you avoid late or missed payments. With eBills, most financial institutions make it easy to set reminders for when your bills are due.
Your bank or credit union should tell you how many business days it will take for your payments to arrive to your payee. And some will even reimburse your late fees if your properly scheduled payments aren't delivered on time.
Finally, online bill pay can help you consolidate your payments in one place. Instead of having to visit a separate website for your internet service provider, phone provider, and mortgage company to make payments each month, you can just log on to your online banking portal and pay them all.
Drawbacks of online bill pay
One of the potential drawbacks to moving to online bill pay is that you may forget to check your bills and schedule payments. After all, you might not have an envelope arriving in your mailbox each month to remind you about your payment due date.
To avoid late or missed payment, you'll want to set aside a specific time each week to log on to your online banking account and manage your upcoming bills.
You'll also need to make sure that there are enough funds in your checking account to cover the payments. If there are insufficient funds, your bank may use overdraft protection to cover the payment. Some banks may still charge overdraft protection fees, though.
Also, for bills with variable monthly amounts, you'll need to remember to change the payment amount each time. If you'd prefer to give service providers permission to withdraw the full bill amount each month, you may be able to set up direct payments with them using a debit or credit card or ACH transfer. However, this would require setting up multiple accounts at different websites.
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How to set up online bill pay
Setting up online bill pay with your bank or credit union is usually a quick and easy process. Simply log on to your online banking portal and navigate to the "Bill Pay" tab.
Next, you'll need to enter each payee's name and information. Your bank may already have your payee saved inside its system. But, if not, you'll want to have a bill handy so that you can manually enter your payee's name, address, and account number.
Once you've added your payees, you can begin creating payments. For bills that are the same each month, you may want to set up recurring payments. For all others, you can make an immediate one-time payment or schedule your payment days or weeks in advance. You can also cancel automatic payments if you decide to change services in the future.
Finally, you may be able to activate eBills with one or more of your service providers. This can help you organize more of your bills in one place. Also, with eBills, you'll typically have the option of having your bank pay them automatically or setting up reminders to pay the bills when they're due.
Clint Proctor is a freelance writer and founder ofWalletWiseGuy.com, where he writes about how students and millennials can win with money. When he's away from his keyboard,he enjoys drinking coffee, traveling, obsessing over the Green Bay Packers, and spending time with his wife and two boys.
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