Your online bill payment options
By Jenny C. McCune • Bankrate.com

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:

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.