Paying Bills: On-Line v. the ‘Ole Checkbook

ipad-on-couchPaying Bills on-line saves time and money! For us Baby Boomers, did we ever think we would be sitting on our couch and paying our bills without the need for pens, envelopes, stamps or a checkbook? We couldn’t even comprehend an iPad 20 years ago! Welcome to the world of electronic billpay.

Paid bills on-line can be just a click away.
Paid bills on-line can be just a click away.

There are three methods to take advantage of electronic billpay. You can set up electronic banking with your personal bank, a third party service provider or with the individual vendors you are paying. Using your own checking account banking institution for billpay is our preference. Billpay service is most often free with a checking account and any questions or concerns can be addressed by that one institution, should they arise. A third party service (like Quicken) will more likely have costs and per item fees associated with the service. If there is a problem with a payment, you have the billpay provider, your bank and the service vendor to deal with. Finally, many vendors or service providers will allow you to log on to their billpay portal and pay the vendor direct by ACH debit or credit card. This is great when you are late and need a quick payment posted, or if it is just a one-time payment, but otherwise it is way too much logging on and off to be efficient for every payment. And only a select number of large vendors offer the service. We strongly discourage allowing vendors to use automated withdrawals for regular bill payments that do not give you a good opportunity to first review the charges and authorize payment before payments are withdrawn. The exception for use of automated payments would be for those of you who find yourselves travelling more often than not.

There are significant cost savings by using on-line billpay. Banks and third party vendors usually always guarantee timely payment if you set up the payments using their built-in on-line calendars. Most want five business days for vendors requiring checks the billpay provider will be required to mail and two days for vendors whom the electronic payer can pay via electronic transfers. calendarAlmost all financial institutions, utilities, large retailers and large corporations accept electronic payments, giving you extra lead time to set up payments before they are due. Best of all, if the payment is set up correctly, but the payment is for some reason late, the paying institution will pay any late fees and expenses related to the transaction. Be sure to read the terms of your bank or service provider carefully for this guarantee when you select a provider.

In addition to saving on late fees, any mailing costs like stamps, labels and envelopes are absorbed by the billpay provider. Based on an average of ten payments in the mail each week, that would be a savings to you of $239.20 per year in just postage. There is also a savings in the cost of checks used, envelopes when needed, return address labels and other supplies used in the process. Additionally, your time is needed to write the checks, address envelopes and resolve late payment issues when they arise. No longer are these your problems with electronic billpay!

save-time-postage

On-line bill pay also allows you to pay your bills on your schedule. Bills can be posted for payment weeks in advance if you wish. Personally, I like to let them stack up for a few days and then pay on-line and enter them all at once, regardless of the dates they are due in the future.

I can date them any time in the future and still use the money in the account right up until the transaction date, knowing they will be paid on time and at the last possible moment before they are considered late. If you use Quicken or other personal financial software to track your banking and billpay activities, you can easily see the payments in advance and prepare your cash flow needs accordingly without being in sudden cash flow crisis mode!

Not surprisingly, recent statistics show that Millennials and Generation X’ers use on-line billpay and banking much more frequently than us Boomers. We strongly encourage Boomers with any computer and internet skills to join the party and begin to reap the benefits to be found with on-line billpay. You will only be young if you continue to think and act young!

Kent Couch is the Principal Partner  at Paraclete Ventures LLC, a Daily Money Management firm serving Seniors and Busy Professionals in the Arlington, Mansfield and Tarrant County, Texas area.

 

 

 

 

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