When you first start banking online, you may be offered free online bill pay. Online bill pay is a brilliant invention that saves you time and simplifies your budget, but only if you use it the right way. These tips can help you avoid surprise late fees and overdraft charges:
Set up reminders. Some banks let you send yourself reminders if you would rather not pay your bills automatically. Each month, you'll get a reminder to check on your latest bills and then pay them online. While this option is not automatic, you can check your balance to make sure you can cover the payment, and it takes less time than writing a check. Reminders come in handy for bills with changing values, such as the electric bill, and you can also use reminders to alert you when the money in your checking account dips below a certain level.
Make sure you know when the payment posts. Just because you make an online payment on a certain day doesn't mean the company or person you are paying will receive the money on that day. If you make the payment just before a deadline, but the payment posts afterward, you still missed the deadline, and you might be charged a fee. However, many online banks let you know when the payment will arrive, and you can schedule the date of the delivery. Give yourself a little extra time between when you schedule the payment and when the payment is due, and take weekends into account.
Find out if the money has been withdrawn. Since you aren't writing paper checks, you may fall out of the habit of balancing your checkbook. However, you need to make sure the transaction has cleared so you know how much you actually have. Some online bill pay services have features that let you balance your checkbook, but you can use good old paper and pen to track what you've paid out.
Learn about the bank's security practices. While online banking is secure, even more so than banking on paper, you still need to read about your bank's security standards before you sign up. Many sites offer details on their security standards. If your bank has a bricks-and-mortar branch near you, you can set up an appointment with a banker. Many of them have been briefed about online security and can tell you exactly what the bank is doing to keep your information safe.
Stay involved with your money. Even with online bill pay, it is your responsibility to keep your accounts balanced and find out if you have enough money to pay your bills; otherwise, you may wind up dealing with a late fee.
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