Online Bill Pay: What It Is and How To Use It to Your Advantage

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Online bill payment is a secure electronic service that allows customers to pay bills from their checking account. You can set up online bill pay through your bank to have all of your bills scheduled and paid via your financial institution’s payment service or you can pay your bills separately through each payee’s payment site.

Whichever option you choose, it’s important to understand what online bill payment is and how it works so you’ll know if it’s the right choice for managing your payments.

Here’s a quick preview of what you’ll find in this guide to online bill pay.

What Is Online Bill Pay?

Online bill pay provides a quick and easy solution for paying your bills online instead of sending payments through the U.S. mail. You can pay the majority of your bills — such as credit card, toll and utility bills — online.

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Initially, you will have to take the time to set up online bill pay for each of the accounts you would like to pay. But the set up is a one-time occurrence, not something you’ll have to do each month.

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Is Online Bill Pay Safe?

Typically, online bill payments are safe. Both credit card companies and financial institutions ensure the safety of transactions with security protocols such as usernames and passwords, security layers, encryption and automatic signoff.

But it doesn’t hurt to take some extra precautions. Whether you’re paying your bills via your financial institution or on the payee’s payment site, here are some things to keep in mind.

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How To Set Up Online Bill Pay

Now that you’re aware of what online bill pay is and whether it’s safe, you might be wondering, “How does online bill pay work?” Here’s everything you need to know, step-by-step.

1. Set Up Each Payee

Gather each company’s name, online payment address, contact number and your account number to set up payees in the online bill pay system. Once you’ve set up each payee, you won’t have to do it again because the information will be saved.

2. Schedule Each Payment

Schedule the payment amount and due date for each payee. Schedule payments at least five days in advance of the due date to allow payments to post on time. Otherwise, you could face late fees.

When paying a payee directly via its online payment solution, note the cutoff times for payments to be credited on the same day to avoid late payments and fees.

3. Sign Up for Payment Notifications

Take advantage of the option to sign up for notifications when your payments are about to be drafted and/or when they have been sent. Notifications remind you when money is going to leave your account and give you peace of mind that your bills have been taken care of each month.

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Find Out More: How Long Does It Take To Have a Payment Post Online to Your Account?

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Benefits and Drawbacks of Online Bill Pay

Still undecided if online bill pay is for you? It can help to consider the good and bad about this service. Here’s a breakdown of the benefits and drawbacks of online bill pay to help you decide if it’s worth it.

Benefits of Online Bill Pay

Online bill pay has multiple benefits. Here are a few to consider.

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Find Out: Advantages and Disadvantages of Online Banking

Drawbacks of Online Bill Pay

When trying to make any decision, it’s important to examine the drawbacks as well as the benefits. Here are some potential disadvantages of online bill pay to consider.

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Is Setting Up Online Bill Pay Right for You?

Definitely consider signing up for the service if you could benefit from the convenience and ease that online bill pay affords you. Just keep in mind that, for best results, you need to regularly review your billing statements to make sure they are accurate and cancel any subscriptions or services that you are paying for but don’t use.

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