Online bill paying: How to get started By
Bankrate.com
For some computer users, paying bills online is as
natural as using e-mail instead of writing a letter: it's quicker,
easier and best of all, free. For others, bill payment represents
the final frontier of the Internet: Can I trust a computer program
to keep my good credit clean, or should I just stick with writing
checks and licking stamps?
If you're tired of licking stamps and ready to cross
the border into electronic bill payment, you'll be happy to learn
that it has never been easier.
Today, more and more brick-to-click and virtual
banks are offering it free as an online service; others require
a certain account minimum or charge a nominal fee, in part to defray
the cost of a third-party e-payment provider.
Getting started
Getting started is easy. On your private banking site, you'll find
guides to walk you through the steps of how to register the accounts
you wish to pay from and payee accounts you wish to pay to. You
only need to enter the account information once; your private banking
site will keep those accounts available until you remove them. You
can always change the accounts from which you wish to pay your bills
and add more payees as needed.
U.S. banks often limit the scope of online bill payment
to the United States, and may for legal reasons prohibit certain
types of payments, including court-ordered payments and federal
and state tax payments.
At the account registration stage, you also may be
given the opportunity to receive some of your bills online, either
via e-mail, through your private banking site, or both. An increasing
number of larger companies now offer electronic billing, or e-bills,
and accept electronic payment.
Scheduling payments
Once you have registered the accounts you wish
to pay online, the next step is to schedule payment. You simply
select the account you wish to pay from, the payee account you wish
to pay to, the amount you wish to pay and the date you want the
payee to receive the payment.
Your bank may set a minimum number of days, often
four or five, as the earliest available payment date. You may also
have the option to schedule recurring payments, make multiple payments
at once, and automatically pay e-bills.
Your creditors receive your online payment in one
of two ways: electronic payment or check. If the payee is set up
to accept electronic payments, your payment is automatically debited
from the account you select and deposited electronically into their
account, just as if you had written a check. If the payee cannot
accept electronic payments, and most businesses cannot, they will
be issued a check based on your online payment instructions, hence
your bank's 4-5 day grace period.
Banks often contract with third-party providers to
fulfill this online payment function. These same service providers
often work with the payees as well, particularly large corporations,
municipalities and utilities, to provide e-billing and other cost-saving
online features.
Tracking your payments
Naturally, you want to make sure your online
bill payments get processed correctly and on time. Most bill payment
sites include a payment activity page that lists all of your payments
and their status -- scheduled, pending or processed. Remember, in
addition to the four- or five-day delivery time on your bank's end,
it could take several days for your creditor to apply the payment
to your account.
For peace of mind, you may want to request that your
bank send an alert to your e-mail, wireless device or private banking
site when a payment clears.
Warning!
Companies sometimes change the billing address or your account number
without warning. It's important to check your statement each month
to verify those details as well as your transactions. If the billing
address changes, you could easily be hit with late fees even though
your third party service made the payment in a timely manner. You
may receive verification from your third party service that payment
has been made -- but it may go to the wrong place or be credited
to the wrong account.
As with account transfers, you may want to print the
transaction-completed or receipt page when you pay your bills online
as a reminder to make sure they post on your private banking site
or in your next statement.
In the future, online bill payment will likely enable
you to view and pay your bills at your bank's automated teller machine
and from mobile Internet-enabled devices such as your PDA or cellular
phone.
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