Note: This article is part of our Basic Banking series, designed to provide new savers with the key skills to save smarter.
What is online bill pay?
It’s likely that you juggle a lot of bills each month: rent or mortgage, cable, phone, utilities, credit cards — the list goes on and on. Online bill pay is a service that many banks and credit unions offer to help customers pay their bills quickly and seamlessly — you can have money sent directly from your bank to those you owe with the click of a button.
While it’s been possible to pay bills online for many years, customers used to have to pay each provider separately using a credit or debit card on that provider’s website. Now that banks and credit unions are improving their bill-pay services, it’s one-stop shopping: You can control all your payments from a single dashboard.
Your bank or credit union will likely allow you to receive an e-bill — an electronic version of your paper bill that comes right into your bill-pay account. Tracking and paying bills has never been easier.
Why should you use a bill pay service?
Using an online bill pay service can reduce your stress, automate your bill-paying and save you money by avoiding fees. You can stop receiving paper bills, stop writing checks and spend nothing on postage.
You also won’t need to visit 10 separate websites to pay your bills each month. You can just sign in to your bank’s portal and pay via the central dashboard. You can even have payments sent automatically, saving you the need to remember. If you’re always on the go, you can pay bills via your bank’s mobile app.
Another great benefit of using bill pay is that you can avoid late fees; many banks and credit unions will even reimburse you any late fees if the payments don’t arrive on time for some reason.
What to watch out for when using a bill pay service
While online bill pay is a wonderfully convenient service, there are still a few risks you take by banking this way
One is that the ease-of-use can lull you into forgetting about the need to proactively manage your bills. If you’ve set up a recurring payment, you must have a sufficient amount of money in your account every time that payment occurs. If you aren’t vigilant, this can get you into trouble. Additionally, if you expect to pay manually but haven’t set up the right notifications to be alerted when a bill is due, you may forget to check and miss the date.
Another risk involves the inherent insecurity of online banking in general; doing financial business online exposes you to potential risks if security breaches occur. To keep this risk as low as possible, create strong passwords and always use a secure network when signing into your bank account online. This is more difficult to ensure if you are banking through your phone; avoid doing online banking — including bill-pay — on public Wi-Fi networks.
The risks are worth the benefits where online banking and bill pay are concerned. Use the system correctly and with an eye toward security, and you’ll find life that much easier.