Paying bills is one of life’s unavoidable chores. But thanks to technology, it doesn’t have to be quite so tedious. Online bill pay — which simplifies paying multiple bills — is offered by many financial institutions, and yours may be one of them.
Learn more about how online bill pay works and whether it’s right for you.
Online bill pay is a service offered by banks, credit unions, and other financial service providers that allows users to pay bills directly through their financial institution’s online platform or mobile app rather than sending checks or paying bills individually through each provider’s website.
For instance, you might have a mortgage payment, a car payment, insurance, utilities, and various monthly subscriptions. Online bill pay lets you pay all these bills in one place rather than paying each one separately. In addition, many financial institutions let you set up automatic payments for extra convenience. Some banks also alert you when a bill is due and let you view recent payments.
With online bill pay, you use a linked checking account or “pay from” account to make payments to service providers. There is usually no fee to use this service, nor is there any limit on how many bills you can pay. However, there may be a fee for specific options or features, such as rush delivery.
Banks allow you to pay companies or individuals by adding them as a payee. To add a payee, enter their information in the bill pay section of the website or app. Typically, several of the most common payees are selectable from a list. Contact your bank for assistance if the company you need to pay is not on the list.
When paying your bills via online bill pay, you can schedule recurring or one-time payments for delivery on a specific date. Select a delivery date before the bill’s due date to avoid the possibility of past-due bills.
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Online bill pay is a convenient service that lets you pay all your bills in one place, usually without a fee. However, before using the service, consider these pros and cons.
Pros
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Convenience: Online bill pay allows you to pay all your bills without writing checks or sending payments in the mail.
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Schedule payments: You can schedule payments for the future or set up monthly recurring payments.
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Organization: Online bill pay keeps a centralized record of all your payments, making it easier to budget and track monthly expenses.
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Eco-friendly: With online bill pay, you pay your bills online, reducing paper use.
Cons
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Overdrafts: If you aren’t keeping close track of how much money is in your checking account, there’s a potential risk of accidentally overdrafting, resulting in costly overdraft fees.
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Possible to miss a due date: Some billers may not accept electronic payments, requiring banks to mail paper checks, which can cause delays of up to several days. If this happens, your payment could end up being late. However, you can avoid this by scheduling the payment to go out a few days before the due date.
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Fees: In some cases, online bill pay might incur fees. For example, there may be a fee to transfer funds instantly instead of within 1-2 business days.
Visit your bank’s website or app to set up online bill pay. Then, continue with the following steps:
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Start by creating an account. If you already have one, log in with your username or email address and password.
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Find the online bill pay section, which you can usually access through the top or side menu.
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Click or tap “add payee” and select a payee, or manually enter the information of the person you want to pay.
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Enter when and how often to send a payment. For instance, you might send a one-time payment today or on the first of every month.
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Link the account you want to pay from (typically your checking account).
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Set up alerts to inform you when a bill is due, if desired.
While online bill pay is a convenient and secure way to pay your bills, you must manage it correctly for the best results. That starts with managing all your bill payments in one place, a significant advantage of online bill pay. Even if you have multiple bank accounts, using one account for your bill payments is best.
You must also pay close attention to the due dates of your bills and bill pay delivery dates. It’s better to be early than late, and scheduling your payments before the due date safeguards you against late payments. Also, remember that some bills, such as utilities, can differ in amounts every month. Utilities like electricity and gas payments are often higher in winter and summer, so you need more cash in your account to cover those higher bills.
Read more: How much money should you keep in your checking account?
With several bills to pay, you likely have bills due throughout the month for varying amounts. Consider using a spreadsheet, calendar, or app to track all your bill due dates and amounts. Remember that the online bill pay feature may let you set alerts for upcoming due dates, which can also be a helpful way to remind yourself of various bills.
Finally, it’s a good idea to monitor your bank account regularly. It’s easy to forget about certain transactions or miss something fraudulent when doing everything digitally. Monitoring your bank account and checking bank statements regularly can help you catch these transactions and avoid unnecessary overage charges.
