Automate Your Monthly Bills

Nearly 2 years ago I was introduced to automated bill pay, a service that most banks and credit unions now offer their customers. I doubted its effectiveness and usefulness at first, but now, I can’t live without it. Each bank calls it something different, so for my purposes I’ll refer to the process as “Bill Pay.”

What is Bill Pay?

The short. An automated bill payment service provided by your financial institution.

The long. With Bill Pay, you can automate your monthly bills and drastically reduce how many checks you write. I used to go through a box of checks every couple months. Since I started using bill pay two years ago, I’m still using my second box. This alone is a money saver. Checks can get expensive, especially designer checks. Bill Pay also lets you write single, one-time checks which I use to pay contractors, freelancers, doctors, an occasional event or building reservation fee, and even some online purchases.

Why Should I Use Bill Pay?

The short. Reduced stress, easier budgeting, less hassle.

The long. Automating your bills guarantees that your bills are paid on time every time. When I started, my stress meter’s needle took a dip toward empty overnight, and the time I spent slogging through bills dropped from 3 hours to 10 minutes.

Budgeting is simplified with Bill Pay. Some institutions show you how much is in your checking (or the account you use for Bill Pay) and how much will be left over once the bills are paid. It takes the guesswork out of paying your bills. Each month I know exactly how much money is in my account and how much money will be left.

When you write a check and mail it from home, you wait for at least a week, usually more before your account reflects the deduction, and sometimes this can take over a month. Not so with Bill Pay. The amount is deducted from your account the moment the check is written. Now that’s awesome. But wait, it gets better. Let’s say you leave on vacation but forgot to pay your bill before leaving, or your dog eats your mail. Your bill still gets paid. No worries, no hassle–priceless.

Another bonus is that Bill Pay shows you all payments in one spot without having to log in to 8 zillion web pages to find your balance and walk through each online payment system start to finish. Pressed for time? Bill Pay is your solution.

How Do I Use Bill Pay?

The short. Set up a payee in the system with a set dollar amount and a scheduled date and the bank writes and sends your check for you.

The long. Bill pay requires an online account with your financial institution, so set one up immediately; it’ll be worth it, trust me.

Each institution has a different online interface, so I’ll generalize for now in the set up structure. When you first log in to your account look for a tab or link that says something like, “Bill Pay,” “Pay Your Bills Online,” “Write Checks Now,” or “Automate Your Bills.” You get the point. Click that link.

Most likely you’ll see a Bill Pay introduction page. Make sure you read what your financial institution says about Bill Pay, especially because some may charge a small monthly fee to use their service. This fee is diminishing and even non-existent now with some banks as a way to one-up the competition.

Next, add a Payee, someone who you pay monthly bills to, so look for a link that says, “Add Payee,” or “Pay Bill To…” or something similar. Click that link. You know you want to. Some banks have a list of “popular payees” like telephone, energy, gas, or a credit card company. Choose a payee or enter your own. You’ll have to enter the payee’s name, address, zip code, and your account number. Enter all this information and the amount to pay.

At this point, you also choose the payee to be a recurring or one-time payment. The recurring payments can be set up on a daily, weekly, monthly, or arbitrary time period basis. Extra charges may apply for schedules requiring lots of check writing, still worth it. Then simply save the Payee, or Schedule the transaction, whichever your bank requires.

Once set up, your financial institution automatically writes and sends checks for you on the scheduled date. You can also log in at any time and write an extra check this way to anyone. Like I said earlier, I’ve used the individual check feature to pay contractors, doctors, freelancers, ninjas, etc.

A Few Questions and Answers

Q: What if my monthly bill is a variable amount?
A: Most bills are variable amounts, so to be safe, use the amount from the highest bill you’ve recieved (which usually isn’t too far above the median bill amount). If your highest bill is an outlier, then use the next highest amount. You don’t want to underpay your bill, so just be smart about it. You can also check to see if the payee has an option to equalize your monthly bills.

Q: I’m scared to start… what if I don’t have money in my account when the bill is due?
A: Start simple by automating only one or two bills at first, like your rent or electric bill. Each month add another bill or two until you’re fully automated and trust the system. It took me 3 months to fully automate my bills and figure out financially the best time to pay them. I have my Bill Pay split in two sections, one at the beginning of the month, and one in the middle of the month which corresponds with my paycheck schedule. I always know the money will be there because I was just paid.

Q: What if my check gets lost in the mail?
A: It might. But then again, the checks you used to write had just as great of chance, right? And this time, the bank has record of it.

Q: What if I want to cancel a payment or skip an automatic payment?
A: Easy peasy. Most financial institutions let you schedule each payment. This means as if you need to stop a payment, simply log in adjust the next payment date to another day that works for you.

Q: What if I have a bill scheduled and the money isn’t in my account?
A: I’ve seen banks handle this in two ways: 1) they don’t write a check and they’ll send you an email saying that the payment failed, and 2) they write the check and charge you an overdraft fee. Look for a financial institution that does it the first way. The second way, in my opinion, is playing dirty.

Q: Should I move all my bills to Bill Pay, even ones that are automated via the Payee’s web interface?
A: This is a personal choice, but I’d say yes.  The ease and convenience of having all your bills on one page makes it worth it x10, and to pay your bills you only have to remember one username and password because it’s all in one place.

So I’m curious… what are your experiences in using your bank’s automated bill pay service, or what’s keeping you from using it?

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