Today’s banks and credit unions in the United States all have ways in which you can access your account online with a feature usually called "Bill Pay". The vast majority of the time the Bill Pay service is provided free by the bank. In rare instances you may pay a small monthly fee, but at least it’s small.
Over the years I’ve learned a few things with paying bills online.
1. Electronic payments are not instant (anymore).
What’s supposed to happen is that when you make an electronic payment it’s supposed to be processed in 24 hours. This used to be the way it worked. For example, if you owed a bill on first of the month, you could have it electronically submitted on the last day of the previous month and everything was a-okay. The payment was processed in that promised 24-hour span.
That doesn’t happen anymore. It’s more or less a guarantee the payment will be late if you do this. Somewhere along the line electronic payments lost their near-instantaneous status and now they are no faster than using regular postal mail.
Your best bet to ensure payments arrive on time is to electronically submit them 7 days in advance. If there is a holiday in the span of that 7 days, make it 9.
2. Having the bank mail out checks via Bill Pay is more reliable (and cheaper) than mailing a check yourself.
The US Postal Mail system is generally reliable, but chances are you’ve had a payment lost in the mail a few times. It happens. This is especially true if you live in a rural area.
All Bill Pay systems have the ability to have the bank mail a check on your behalf if an electronic transaction is not available for any bill. And fortunately for you, you’re not charged extra for postage which is even better. To date, I have never had a bank mail-out not get to its intended destination.
To get the same level of mail service your bank does, you have to physically go to the post office and fork out some extra cash for Delivery Confirmation. This can cost quite a bit if you’ve got several letters to mail out. Better to use the bank. Saves cash and the bill payments get to where they’re supposed to go.
3. It is better to use Bill Pay rather than pay direct.
Example of paying "direct": Let’s say you have a Verizon Wireless account. That company – as well as many others – allows you to directly input your checking information so you can make payments direct to Verizon.
My opinion: Don’t do that. It is better if you use your bank’s Bill Pay system; there are several reasons for doing this:
- All the bills are paid from one place. Much easier to manage.
- The Bill Pay system has a built-in calculator that tells you exactly how much you’re sending out. When separated you have to do the math manually. It makes for balancing a checkbook much easier when you can have a system do some math for you.
- There is no speed advantage using a pay-direct over Bill Pay, so you might as well use the bank instead.
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