Online bill paying has moved to the mainstream. A 2014 Aite Group report found that nearly half of the 16.3 billion bills paid by Americans in 2013 (totaling $4.3 trillion) were paid either online or by mobile device.
This is not surprising: Online bill paying is convenient and environmentally friendly. It can also save consumers money.
Here, then, are the basics of how online bill paying works, and why you should embrace it.
Think about how much work it is to mail your mortgage payment each month. Think about your car payment or student loan bill too. You have to write a check, record the amount in your checkbook's ledger, address an envelope, find a stamp and go to your local post office or the nearest mailbox to mail the payment.
When you are paying many bills each month -- as the average U.S. household is -- this can add up to a lot of wasted time.
When you pay your bills online, though, you simply log onto your online banking with your user name and password. You can then either manually send your payments or set up automatic payments, so they will be sent automatically on the same day each month with you doing nothing.
That leads to the next benefit of online bill paying: It can save you money over the long run. It makes financial sense to sign up for a free online bill pay service. Consider these numbers from ClearPoint Credit Counseling: The company estimates that the average U.S. household pays 15 bills every month. If you factor in the cost of a stamp for all of those bills, it comes out to more than $70 a year. Also, those calculations do not factor in the costs of envelope or the gasoline you spend driving to and from the post office.
Now, $70 a year might not seem like much money, but it can add up. Why spend it if you do not have to?
Do you care about the environment? Do you consider yourself a "green" person? Then online bill pay is for you, too.
Think of how much paper you waste when paying bills the old-fashioned way. Your creditor sends you a paper bill. You use an envelope to send it back. You tear off a check from your checkbook to write in your payment. That is a lot of paperwork that simply disappears when it comes to online banking.
Some consumers are hesitant to sign up for online bill pay because of security concerns. They do not want hackers to gain access to their accounts. Online bill pay is actually more secure than leaving checks in your mailbox. There are simple steps you can take to protect your accounts.
First, choose a password for your accounts that will be difficult for others to crack. Make sure to include numbers, symbols and letters in your password. Secondly, don't fall for phishing scams. Your bank will never ask in an e-mail message for your password, ATM number or Social Security number. Never give out personal information online or over the phone to someone claiming to be from your financial institution. If you receive such requests, the odds are good someone is trying to steal your personal information.
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