What if you could pay your bills faster, moreefficiently, and avoid post office visits,without ever lifting a pen or pencil?Would that option interest you?
According to data reported in a recent article, millions of Americans have already optedfor this timesaving alternative. It's online bill paying, andJupiter Research reports that about 19 million Americanhouseholds, up from 7.8 million in 2001, do at least someof their household bill paying online. Perhaps moreimportantly, more than 61 million households are expectedto pay at least a portion of their bills online by 2008.
Convenience is certainly a key factor. But even moreimportant, the article notes, is the fact that manybanks and brokerage firms are offering this service forfree. In fact, some offer incentives to try it.
For example, the article notes that last year,Chase sent letters to customers who were doing somebanking online but were not yet paying their bills electronically.The firm offered customers $5 for each bill theypaid online, up to $25, to get them to start. Not surprisingly,the hook worked. Chase reports that the number ofcustomers paying bills online has risen 25% since 2002.
Online bill paying is not brand new. The Times articlecites statistics from TowerGroup that an estimated40% of major creditors already have electronic paymentprograms, and that another 35% plan to introducethem during the next 2 years.
And wouldn't it be more convenient to pay most, ifnot all, of your bills from one site? That's what banks andbrokerage firms are counting on. Since the average householdreceives 13 bills a month, according to TowerGroup,banks and other financial Web sites are hoping the one-stopapproach to online bill paying will be contagious.
The way these one-stop bill-paying sites work,according to the article, is that customers createa password-protected account. This process may takean hour or so to set up a user profile, enter accountnames and numbers, and so on. The online paymentsare usually debited immediately from the bill payer'saccount. However, the time they take to clear can vary.Payment made through a bank or other third party servicecan take from 2 to 7 days to clear.
Despite the growth and acceptance of online bill paying,there are still some hurdles and considerations thiselectronic service needs to overcome. For example, the article notes that most people who pay their billsonline still receive paper invoices in the mail. Giving upthe perceived control associated with holding a paper billin one's hand may be a tough sell.
Cost of Control
There are, however, companies that will enable peopleto view their entire bills online. Paytrust is one companythat will take an individual's paper bills, scanthem into their system, and provide them online. Thecost for this service is $12.95 per month, which mightexceed the cost of postage if you choose to simply mailin your payments the old-fashioned way.
Another concern is that something might go wrong inthe payment process. According to the article, companiesthat offer online bill paying say errors affect lessthan half a percent of all their online accounts. To theircredit, many of these companies offer to pay late fees thatmay result from an error they make.
For those looking to give online bill paying a try,the suggestions from experts is to start slowly. Trypaying only one bill and do it directly on a creditor'sWeb site. Then write down or print out the confirmationnumber. Call the company in a few days to makesure the payment went through.
If the process goes well, and your comfort levelallows, add a few more bills to the mix the followingmonth.