In the old days, paying your bills meant sitting down at the kitchen table with a hot cup of coffee, a calculator, a checkbook and a roll of stamps. If the post office did its job, the companies to which you owed money would receive your check two or three days later.
Today’s bill paying session is a little more high-tech, and it cuts the post office out of the loop. Even if there’s no other advantage, the fact that you save on postage–and there’s no possibility of a payment getting lost in the mail–is good enough for most people. Another advantage is the bookkeeping aspect–your bank’s online bill payment portal won’t let you make a payment if you don’t have money in the bank. The best portals will, however, allow you to schedule a payment for a later date.
Free Online Bill Paying
Many banks now offer online bill paying as a free value-add to account holders, although many other major creditors, such as utility companies or credit card companies, allow you to pay directly online. The reason banks have come to offer this service for free is simply because of the demographics. People who pay bills online are more loyal, and have more money. They’re also more likely to use other bank products, such as loans and credit cards, from which the bank derives revenue. That’s the first lesson–if your bank isn’t offering online bill pay for free, they’re not giving you the best deal.
Using your bank’s online bill pay gives you the convenience of paying all your bills in a single online session. Some users still prefer to pay some bills directly at each site, despite the fact that it is less convenient, because by visiting the biller’s web site directly, the payer can gain access to detailed transaction reports. This can be especially useful if you’re cautious about the details–suppose you have a large phone bill, and want to review the individual call list. You have to visit the phone company’s site directly to get the detail, the bank site will only provide a summary. Also, if you’re paying close to the due date, paying directly at the biller site will get your account credited faster than paying at a bank’s online bill pay portal. Some forward-looking banks are trying to compete by offering account detail as well.
There is also the question of security, although banks have been quick to address this concern. Virtually all online portals are password protected and use encrypted sessions, and some even use a hardware token, which makes it nearly impossible for an attacker to steal your account information. Beware however, of rogue emails claiming to be from a bank, requesting your account information. If you get such an email, call your bank directly to verify the email’s authenticity. Banks seldom send out such requests via email.