What Is the Best Way To Pay Your Bills?

Young man at home, paying bills online.
AleksandarNakic / Getty Images

The more bills you have, the more difficult they can be to manage. But paying your bills on time is crucial if you want to avoid late fees and build your credit score. Getting organized and finding the best method for paying each bill may help you stay on track and get out of debt. 

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Just remember, there are pros and cons to each type of payment method, and a one-size-fits-all approach may not work for you. The most important thing is finding a system that you will use that prevents you from missing payments or getting overdraft fees. Here are some of the best options for paying your bills.

Getting Started

Before you choose how you will pay your bills, make a list of every expense you have each month. Write down the amount, the balance and the due date. Not only will this help ensure that you don’t miss a payment, but it can also assist you in establishing a budget. Bonus effect, if you are trying to pay down debt, keeping track of the balance can help you see your progress and achieve your goals. 

After making a list, write down your due dates on a calendar. You can also set bill pay reminders on your phone to make sure that you do not accidentally skip payments. Finally, review your statements. Check for fraudulent charges, unwarranted fees or other suspicious activity each month. Once you have done these things, pick a bill payment method that makes the most sense for you and your financial situation.

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Automatic Payments or Direct Debit

Setting up direct debit or signing up for autopay are some of the most convenient ways to ensure that payments are made on time. For people who know they will have the money in their bank account, it can save time and is usually free. 

Pros: It is easy to set up and will help prevent late charges. It is ideal for individuals with a steady income who know that enough money will be in their account each month. 

Cons: If you don’t have enough money in your account, you could incur overdraft fees. Plus, if you are paying bills on a credit card that you do not pay off each month, you could carry a balance and spend massive amounts in interest. If you don’t review your monthly expenses, you could make recurring payments on something you don’t need or use, like a magazine subscription or gym membership.

Online or Phone Payments

If you are uncomfortable with money automatically being withdrawn from your account each month, you might consider making online or phone payments directly to the company. However, if you choose to pay bills manually, you need to get organized and ensure that you have a fuolproof system to avoid hurting your credit score with late or missed payments.

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Pros: You have more flexibility when paying bills online or over the phone. If your income fluctuates, it can help you avoid overdraft fees by paying when you have the money available in your account (as long as it is before the due date).

Cons: It is much easier to miss payments. You’ll need to be diligent about paying your bills and staying on top of due dates. 

Paying by Mail

For some bills, you may want to consider sending in a check. While most companies accept (and prefer) online payments, you may feel more comfortable sending in a check or money order through the mail. For most people, this method of bill payment may be cumbersome since you not only have to remember to pay on time each month but also get to the post office.

Pros: A check is more secure than paying in cash. It can also help you resist the temptation of paying bills on a credit card that you may not pay in full each month. Also, some companies charge for online or phone payments, so mailing in a check could help you save on those “convenience” fees.

Cons: Mailing in bills each month takes time. You will need to give your payment enough time to reach the payee before your due date. While many companies have a grace period, you could collect exorbitant late fees if the post office gets behind. Plus, if a check gets cashed and you don’t have enough money in your account, the company and your bank may charge you fees.

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Choosing the Right Payment Method

Now that you know your bill payment options, you can decide which method makes the most sense for you based on your financial situation. The main thing is to get your payments in on time, every time.

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