How Does Online Bill Pay Work?

Simplify your life with online bill pay technology

Man checking his online payments
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Online bill pay is an electronic payment service that allows you to set up a secure online account to make one-time or recurring bill payments. This can be a convenient way to pay your bills quickly and on time. The source of funds for the payments is usually a checking account, but some bill pay services also work with credit cards. All bills and transactions are accessed on the bill pay website.

Here are some tips for choosing an online bill pay service that you might want to keep in mind. 

The Cost of Online Bill Pay Services

There are some very good free online bill pay services, although they typically don't come with many special features. If you want more of these features, such as the ability to view several months' worth of bills online, you might prefer to use an online bill pay provider that charges a monthly fee. This cost is worth it for most people because they find it actually saves them money by eliminating the expenses associated with postage and purchasing checks, not to mention their time. 

Another option is to access free online bill pay services through one of the financial institutions you already use. Many banks offer this service so you might already have it available to you. Ask your institutions whether any of them offer online banking

Electronic Funds Transfer Vs. Mailing a Check

Payments can be sent from your account in two ways: electronic funds transfer or a paper check.

It's best to set up payments with companies that will accept them electronically because this creates a seamless online payment arc. But online bill pay services can also usually cut and mail a check in situations where electronic payments are not accepted. Be sure to allow extra time and plan ahead—usually five business days—for the check to be cut and mailed.

Is Online Bill Pay Safe?

Yes, online bill pay is perfectly safe. Transactions and other personal and financial information are heavily encrypted to prevent theft and fraud. You can also follow some simple tips for paying bills online to make using these services even safer. For example, a good rule of thumb is avoid clicking on payment links from an email. Always log onto the online bill pay service directly through a web browser, using your unique login and password.

Is Online Bill Pay for You?

If you have bills from several different sources—and most people do—online bill pay is worth the time to set up and the potential cost, which is typically low. Free online bill pay can be a great idea if you only pay two or three bills each month. Another way to save is to see if you can pay those few bills for free directly at the payee's website.

Online bill pay services offer a convenient, safe and inexpensive way to ensure that your bills are paid on time. It's just another way that today's technology makes life's common and tedious tasks so much easier.