BY CATHY CARTER
When you juggle your mortgages, utility bills, and credit card payments every month, using online banking to pay them off makes a lot of sense. It is a service that your bank provides to organize your bills and pay them on-time from your checking account. Some credit unions and online bill-pay services also allow this convenience with a minimum charge.
The biggest advantage of online payments is to get rid of writing and mailing several checks every month to pay your dues. However, nearly 1/3rd of Americans above 65 still do not use this mode of payment. If you are also wary of online payments or banking systems, let’s look at their benefits, functioning, and processes to remove your doubts.
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Why Should You Opt for Online Bill Payments?
With online banking services, you can automate your financial transactions, and bill payments are no exception. If you have bills with the same amount to be paid each month, such as car loans or mortgages, you can set up a recurring payment system using the online bill-pay services of your bank or a credit union. Even for varying bill amounts, you can schedule payments ahead to avoid missed or late payment charges.
The core benefit of online payments is a guaranteed and timely service if you have sufficient funds. Instead of visiting separate websites for each payment or writing manual checks, you can sign in to the bank’s online portal and complete an automated process within minutes.
Most importantly, it adds an extra layer of security to your credit card payments, especially if you have a shortage of funds.
How Does Online Bill Payments Work?
The online bill payment system links back to your checking account for making immediate one-time payments, recurring payments, or future one-time payments. You can easily set up online bill-pay with your bank or a private service provider by logging on to its portal. Link on the bill-pay section on the website and choose the relevant link to add a payee and the recipient service provider’s name.
The process will run smoothly if you gather all your bills with specific account numbers and addresses. Input the information into your bank’s platform and schedule payments when they are due. You can also set reminders to track the due dates for each payment.
And if there is no electric way to make payments, the banks also arrange for printing the checks and mailing them on your behalf to the respective service provider once you consolidate your payments in the system.
How to Use the Bill-Pay Service Safely
When you choose your bank’s bill-pay system, stay cautious, and make the payment safely. Here are a few vital things to keep in mind.
Have Sufficient Funds in Your Account
Though the system of online banking and bill payment is pretty straightforward, it may sometimes make you forget proactive bill management. After setting up a recurring payment, you may forget about keeping your account sufficiently funded to seamlessly let the payments flow. It may result in penalties for late payments or missed bill payments. So, keep sufficient funds in your checking account every month to avoid any difficulties
Adopt Safe Internet Banking Practices
Many people are skeptical about using online financial services due to the scare of hacking, identity theft, and other cyber threats. Sometimes, financial transactions conducted online can expose you to the risks of security breaches. However, it shouldn’t stop you from availing yourself of this convenience.
You can minimize the risk by setting up strong passwords and using secured networks when signing into your bank’s portal. As a general practice, avoid online transactions like bill payments or fund transfers when working on public Wi-Fi networks.
Transparency is Significant
Sometimes, when you set up a manual bill payment system with a service provider, you may notice some discrepancies down the road. It happens when you send a check to the payee through the service provider and get your account debited even without the payee cashing out the check. This will not only affect your bank balance but also result in penalties for late payments.
The best way to avoid such instances is to work with the bank that follows high transparency levels in its services. You can mostly find a reliable bank that provides the date when the check will be cashed and add it to your payment history.
Check the Fee If Any
Avoid last-minute surprises when tallying your account every month by asking about any service charges applicable to the bill-pay service. Some transactions are mostly offered free by your bank, while it may charge a monthly or transaction fee for your account in some cases.
Remember, online bill payments come with several benefits. You need to budget your expenses and pay attention to your account balances to reap these advantages.
(Disclaimer: The article is sponsored, and hence promotes some commercial links.)