Online Bill Pay Benefits

April 7, 2010

The benefits of online bill pay outweigh the downsides of setting up automated bill payments online, at least in my opinion.  Although I’ve written lately about how I missed a payment using our online bill pay system, the problem wasn’t that we’re using automatic bill payment; but rather that I wasn’t checking in periodically to make sure all bills were being paid smoothly.

Online Bill Pay Reminders

Setting up bill payment online is only the first step, you should still keep an eye on your payments to make sure all your bills are being paid.  One good way to do this is to setup calendar reminders for the days of the month right before your biggest bills get paid.

For example, our largest bills by far are our mortgage and credit card bills.  They’re always due at the same time each month so an alert a few days before they’re due can remind me to login and check to see that they’re scheduled.  I didn’t have these reminders setup when I missed my payment but I do now.

Online Bill Pay Benefits

Time Savings

So what’s the point of using online bill pay if you still have to login and check on your bills?  For me, it’s still faster than sitting down each month and writing and mailing a bunch of checks. It only takes two minutes to go online and verify that all our payments are set to go.  The main problem for me is simply remembering to check on them, which is why the alerts are helpful.  Some online bill pay systems offer their own alert methods through email or automated phone calls or you can setup your own calendar alerts for regular payments.

Electronic Records

Not only does online bill pay save me time but the convenience of having all of our payment records in one place is great. Having one set of electronic records that I can search and download makes it much easier to track where our money is going.  Some banks or online bill pay services offer good reporting features on their sites, if they don’t you can still download a consolidated file and import it into a tool like Quicken.

Payment Rules

Another useful feature of online bill pay is the ability to setup different payment rules for each of your bills.  For example, you can have your cable bill be paid automatically each month as long as it’s under a specified dollar amount.  If it’s over the maximum then instead of being paid automatically it’s set to pending and you’re sent an alert.  These types of rules are nice because they can protect you from paying too much in the event of billing errors.

Online Bill Payments

One potential downside to automated bill payments is the potential of trying to pay bills out of an account that doesn’t have sufficient funds.  The best solution to this worry is to setup overdraft protection on the account that you make the payments out of.  So if there is a payment that exceeds your balance it will pull the needed funds from a backup account and avoid the fees and hassles of non–sufficient funds issues.

Another reason you might not be sure about online bill pay is that you like to keep your funds in your savings account as long as possible to earn interest on the balance before moving it to checking and paying your bills. Fortunately, now there are enough banks that offer interest checking accounts that you can move the necessary amount of money into your checking account and still earn interest on it while the funds are waiting to be paid out.


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Ben Edwards, the founder of Money Smart Life, saved up enough to buy a Nintendo back when he was 12 years old. When he used the money to buy shares of Wal-Mart stock instead, he knew he wasn't like the other kids... His addiction to personal finance has paid off for his family and now he's helping you to afford the life that you want. Check him out on the web at Google Plus, Twitter and Facebook.

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5 Responses to Online Bill Pay Benefits

  • F. D. Bryant III

    “One potential downside to automated bill payments is the potential of trying to pay bills out of an account that doesn’t have sufficient funds. The best solution to this worry is to setup overdraft protection on the account that you make the payments out of”

    Actually my solution to this is have everything charged to a credit card and then I just pay off the card every payday manually. That way I don’t have to worry about overdraft, I automatically get a number of CC protections, and I reward benefits.

  • KCLau

    It is really beneficial to do all those errant without going to the banks.
    I admire that your country banking system is at a such advanced stage.
    In my country, most standing instruction to autodebit our saving accounts come with a fee. Furthermore, there are bills that simply don’t support auto-charge.
    I hope the local banks here will improve their system soon enough.


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