The Good, Bad, and Ugly of Online Bill Pay

Do you have internet access and a device to get online? If so, you can probably pay most of your recurring bills online. If not, there are plenty of alternative financial service providers that offer online bill pay. Heck, you can probably go down to the local big-box retailer and at least pay your utility bill online.

Online bill pay is made possible through the same technologies that brought us online banking. Even if you don’t do the majority of your banking online about which you can read more, paying your bills online might be the way to go. Online bill pay offers a lot of positives as well as some negatives. This post addresses the good, bad, and ugly of online bill pay.

The Good

Online bill pay has so many positives that it is difficult to decide where to start. For a lot of consumers, the biggest benefit is convenience. Online bill pay eliminates the process of writing checks and stuffing envelopes. It eliminates the need to pay bills in person because you forgot to send a check in the mail.

Here are some of the other good aspects of online bill pay:

• Speed – Sending checks in the mail means having to get your payment out at least a week before it is due. Online bill pay is, for all intents and purposes, instantaneous. It is so fast that you can pay a bill on the very day it is due without worry.
• Automatic Payments – Online bill pay makes it possible to set up automatic payments for most kinds of bills. Automatic payments can be set up with credit cards, debit cards, and even bank accounts. You will never be late with auto payments.
• Multiple Methods – As you have guessed by now, there are multiple methods for paying bills online. Have money transferred directly from your bank account. Have bills charged to your credit card or debit account. Some merchants will even let you pay using online payment platforms like PayPal.
• Easy to Do – Another big positive of online bill pay is that it is easy to do. You do not have to be a genius. If you know how to visit a website and enter a credit card or bank account number, you can pay your bills online.
• Universal Acceptance – Finally, online bill pay is almost universally accepted at this point. With very few exceptions, the companies you pay routinely – like your utility company and mortgage lender – accept online payments.

Now that you know the good, we have to move on to the bad and ugly. Unfortunately, no method of paying your bills is without its drawbacks. There are certain things about online bill pay that might give you pause.

The Bad

Perhaps the biggest concern of online bill pay, at least from a practical standpoint, is the same convenience that makes it so awesome. Convenience has a habit of making us lazy. When we get lazy, we make mistakes that would have otherwise been avoided.

Online bill pay affords the opportunity to set up automatic payments so that you don’t miss a bill. That is all well and good, but this also affords the opportunity to forget about your bills. Why spend time thinking about them when payments are handled automatically, right?

This could lead to incorrect bills going unnoticed. It could lead to outright fraud. At the very least, forgetting about your bills could make budgeting more difficult. Some people have to work harder to remind themselves of their bills once they start using online bill pay.

Here are a few more of the bad aspects of online bill pay:

• Insufficient Funds – When bills are paid directly from your bank account, there is always the risk that you will forget and not have enough money to pay an upcoming bill. That leads to insufficient funds, the bill not being paid on time, and a variety of late fees and penalties.
• Paying Too Much – Some of the bills we pay, like car insurance, for example, call for regular price comparisons in order to get the best deal. Automatic bill pay makes it easy to forget this concept. As a result, we end up paying too much for a product or service we could get cheaper elsewhere.

Again, some people find that online bill pay makes budgeting more difficult for the simple fact that they are spending less time dealing with bills as opposed to income. Anyone who is already having trouble budgeting might want to get that part of the personal-finance equation under control before opting for online bill pay.

The Ugly

The ugly part of online bill pay is a fraud. Unfortunately, there is no such thing as a 100% secure network. Every network can be hacked if those responsible for it do not pay attention. Moreover, fraud can occur even without hacking a network. Something as simple as giving your credit card number to a creditor could lead to an employee of that creditor stealing your information and your money.

There are ways to get around security issues. For example, some people set up separate savings accounts for their bills. They transfer money into those accounts a few days before bills are due. The idea with this strategy is to only put enough money in the account to cover upcoming bills. So even if fraud does occur, it only affects a small amount of money.

Along those same lines, other people purchase prepaid debit cards for the same reason. Cards can be reloaded with funds when bills come due. Anyone perpetrating fraud against a prepaid card would only have access to a limited amount of money. The account attached to it can be canceled so that the card is no longer usable.

There is a lot to love about online bill pay. However, there are some negatives as well. Online bill pay is at least worth thinking about if you are not already doing it. It is fast, easy, and quite convenient.