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Your local utility is no longer
content just to get your monthly payment. It also wants some say
in how you settle your account.
The electric company, phone company, credit card accounts
and even Uncle Sam want us all to pay our debts electronically.
A growing number of people are complying, but first they must determine
exactly which is the best electronic way to pay.
Consumers have three major choices when it comes to
online payments:
Use a bill consolidator or aggregator, such as
your bank or a third-party service, to pay all bills from one
site.
Go directly to each account holder to make payment
arrangements.
Establish automatic online credit card payments
of regular bills.
Each method promises convenience, security and, to
some degree, savings for both you and your creditors. But to make
sure you do indeed benefit from online bill payment, here are some
things to consider.
Banking on e-payment
U.S. banks and other bill consolidators have fared poorly in the
online bill paying sweepstakes in the past, mainly because they've
charged for what consumers feel should be a free service.
More and more banks now offer free online bill payment
or waive the charge if you keep a certain balance in your checking
account or meet other requirements. It's generally worth it for
the financial institution because it then can save money by servicing
your account electronically. Plus, banks report a higher retention
rate for electronic bill payers and say that electronic bill payers
tend to use more bank services, thereby producing more bank revenue.
Some financial institutions have always allowed account
holders access to free electronic bill paying. Pennsylvania State
Employee Credit Union, the oldest and largest credit union in the
state with assets of $2.2 billion, has never charged for the option.
But not everyone has joined the free parade.
For aggregators, it's a business decision; the electronic
payment service is their only contact with the consumer and therefore
the only way for the company to make money. PayTrust.com, for example,
charges between $5 and $15 a month for its service, depending on
the features chosen.
The cost doesn't matter to some consumers. Kristen
Utt of Atlanta happily forks over money to PayTrust each month because
she figures her monthly fee is offset by what the process saves
her elsewhere.
"I pay about eight bills a month. I just reconcile
what PayTrust charges me with what I'd spend on stamps and late
fees," Utt says.
Direct and credit card arrangements
When it comes to paying through a specific billing site, such as
your credit card holder, phone service or utility company, the charges
(or lack thereof) are all over the board.
Many will take your e-payment at no charge. Some,
such as AT&T, offer discounts for electronic payments. But some
charge extra for electronic bill paying. Of course, if you only
occasionally make electronic payments, a $3 electronic payment charge
might be worth it to avoid the $20 late fee you'd face because you
didn't have enough time to get the check there via the mail.
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