As more and more individuals turn to online banking, online bill pay is a natural step for those who want to take advantage of the ease and convenience of today's technology. Not only is online bill pay good for the environment (goodbye paper bills), the system can help you manage your bills and finances. Online bill pay also takes the trouble out of writing checks, stuffing the envelopes, applying postage, and getting the bills in the mail. While you're still spending the money on bills, online bill pay can be a much more pleasant experience compared to traditional bill paying methods. Once you have online bill pay set up, you can focus your attention on other things in life.



While setting up online bill pay is easy, it's important to know what type of bill pay is available to you. Online bill pay can be offered by both your bank and by service providers such as the phone company, mortgage company, etc.

An online bill pay offered by your bank is a service that directs money from your bank account to whoever you designate. In some cases, the service actually prints a check and mails it to the recipient. In other cases, the service provider is setup within the bank's system, allowing the bank to simply transfer money electronically when you use online bill pay.

Setting Up Online Bill Pay

To begin, you will probably need a copy of the bill that your service provider sends you. At the online bill pay website, set up a new payee in the name of that company. Enter the address and your account number into the system. Each time you want to pay the bill, you simply enter the amount charged for the service and you're done. The bank coordinates the payment from your account.

Before setting up online bill payment, check with the service provider or payee to see if they have specific instructions for receiving payments through online bill pay. A payee may not recognize the check because it was printed by the online bill pay service. The payee may provide an alternative address or other instructions to make online payments.

The second type of online bill pay is a service provided by the phone, cable company or other business. With this type of service, you are only allowed to pay one company. To set up online bill pay with a company, you should provide them with a voided check and an authorization form. The process is similar to direct deposit. Once set up, you may pay your bill without having to use paper checks or the mail.

Automatic Online Bill Pay

If you would prefer not to think about having to pay bills every month, automatic online bill pay may be an ideal service for you. Nearly all online bill pay services will allow individuals to set up recurring payments. An online bill pay service can be activated to, for example, pay your phone bill every month or your insurance on a quarterly basis.

Another option for those with a good handle on a budget and available funds, online bill pay can be set up to run on auto-pilot, allowing service providers to pull money from your account without the payer have to click anywhere. This system allows the service provider to request the online bill pay company for payment without any activity on your part. Of course, this type of service is not available unless you authorize it. This might be a good choice for those on an extended leave outside the country, or simply for those who appreciate its convenience. Again, before subscribing to such a service, make sure you have a working budget and plenty of funds to avoid an overdraft from the bank.