Why You Need a Bill Pay System! (2024)

FAQs

Why You Need a Bill Pay System!? ›

Online bill pay helps you organize bills and keep track of due dates. It also makes it easier to see where your money is going, so you can make sure you have enough funds available to cover each payment. You receive and pay your bills all through your bank — one list, in one place.

Online Bill Pay also puts you in control of your finances. You decide when your money leaves your account and you can set up recurring payments giving you the peace of mind that your bills will be paid on time. Payment amounts can be changed and payments can be cancelled before they are sent.

Banks believe that Bill Pay is a 'Sticky' Product. This means that they believe you are less likely to switch Banks if you use Bill Pay. The other reason Bill Pay is valuable to Banks is that it gives them a view into what products or services you have at other institutions.

Paying bills on time leads to an improved credit score, and an improved credit score leads to lower monthly payments when it's time to take out a loan.

In addition to comfort and economies of time and money, automatic bill payments can help a customer improve their credit score by making regular, timely payments to vendors and avoid late fees and penalties.

Disadvantages of automatic bill payments include the difficulty in canceling them, the need to keep adequate funds in your checking account, and the potential of incurring a returned payment or late fee.

There's no monthly service fee to use Bill Pay.

For example, while 66% paid their phone bill online in 2020, that number is now 78%. However, just 34% of consumers make personal loan payments (mortgage, auto, etc.) online or on a mobile device. Payment channels: Mobile devices and online portals remain the top choices for most Americans when it comes to bill pay.

Security: Online bill pay is more secure than paying bills with paper checks. Your financial information is encrypted when you send payments online, which makes it difficult for scammers to steal it.

Bill payments are usually listed as ACH debits, while payments to your account from another entity, like the US Government or IRS, are classified as ACH credits. The difference is that credits are pushed into an account while debits are pulled out of the account. Hopefully, that alleviates any confusion.

How to set up a bill paying system? ›

Your financial crunch may be temporary, but your credit record is enduring...and overdue bills can haunt you for years to come. No matter how tempting, trying to ignore a mounting pile of bills is the worst thing you could do. You'll end up with late fees, interest charges...and a ruined credit rating.

One big benefit to autopay is that typically, this option means you'll never have to pay a late fee. "You don't have to log in, and you're not at risk of paying late because you forgot, which can lead to late fees and ding your credit score. These are reasons why people like to set up auto payments," Rossman said.

If you're tired of writing and sending out checks for monthly expenses, enrolling in online bill pay might be a good solution. Online bill pay is a service offered by many financial institutions that allows customers to pay their bills electronically. It's secure, free and can be done from the comfort of your home.

Any good or service that a customer subscribes to with regularly scheduled payments might be a good candidate for recurring billing. Examples include cable bills, cell phone bills, gym membership fees, utility bills, and magazine subscriptions. Recurring billing may also be referred to as automatic bill payment.

Building your credit score and keeping your utilities working are some benefits of making monthly payments on time. Setting up automatic bill payments or payment due date reminders may help you keep track of payments. Setting up a budget should also help you allocate money for and pay bills on time.

For many people, the convenience and predictability of online bill pay makes it a better solution than paper checks. But some may prefer paper checks because automatic payments may be more difficult to keep track of, especially if you don't log into your online account frequently.

Paying noncredit bills like rent, utilities, and medical expenses on time won't bump up your credit score because they're usually not reported to credit bureaus. But if they're very late or in collections, they'll likely get reported and affect credit scores negatively.