Why We Use Bill Pay Not Automatic Debit

I’ve written about automating your finances, but I wanted to clarify how we automate our bill payments. Most of our bills are paid from our joint checking at ING, one exception being the rent bill. We only use auto debit for two bills: our car insurance and my student loans.

Online Bill Pay is an easy way to remove the hassle of paying bills.

How Does Bill Pay Work? How Does Auto Debit Work?

Online bill pay can help you manage your bills without having to worry about paper bills and checks. With auto debit, the company automatically takes the amount out of your checking account at the due date. If you set up either correctly, you’ll avoid late fees.

Why Use Bill Pay Over Auto Debit?

Personally I like have more control over my account. If something were to happen to our income, like it being delayed or the wrong amount, Ican modify payments from my side to keep everything flowing.

I know someone who had her direct deposit short hundreds of dollars. Since she gets paid on a monthly basis, she tried to negotiate lower payments with some of her bills until Human Resources corrected the error. All of them said  they”ll make a note and take out a smaller amount. Some bills took out the regular amount, though, and it caused a bunch of fees.

How Do You Set Up Bill Pay?

It took an hour to set up most of the accounts up and we only need around 20 minutes a month to pay bills.  Once you set it up, it’s easy to maintain. We took copies of our bills and set them in a pile.

I entered the bill names, addresses, due dates, account numbers, and bill amounts with our bank.  You can set the bills up to be recurring, where it will pay it automatically for you. If a bill changes from month to month, I just login and change the amount. The bank takes care of the rest. I use bill pay to handle my monthly credit card payments.

If there’s a mistake with a paycheck, I could just sign into my bank and fix it quickly.

How Do You Set Up Auto Debit?

You would have to call in each company and give hem your checking information. I’m not a fan of that as it more people knowing my banking information and if something goes wrong with a paycheck, I may have to call each one to resolve it.

Watch out for scams!

Federal Trade Commissions offers some warnings on Automatic Debit Scams and what to do if you’re a victim:

If telemarketers cause money to be taken from your bank account without your knowledge or authorization, they have violated the law. If you receive a written confirmation notice that does not accurately represent your understanding of the sale, follow the refund procedures that should have been provided and request a refund of your money. If you do not receive a refund, it’s against the law. If you believe you have been a victim of fraud, contact your bank immediately. Tell the bank that you did not okay the debit and that you want to prevent further debiting. You also should contact your state Attorney General. Depending on the timing and the circumstances, you may be able to get your money back.

Some Other Opinions on Bill Pay and Automatic Debit

I asked others on Twitter about their thoughts. Here’s what they said:

• SuburbanDollar:”It keeps you in control if you use your banks Bill Pay. You don’t have to worry about the lender “Stealing” any cash.”
• Centsible: “I prefer BillPay since we get $ bi-weekly. I pay everything early, if it was on autopay everything would hit at once.”
• The Paycheck Chronicles: “I prefer automatic debt.”
• Moonstruck Promotions: ”I like bill pay. It makes me conciously aware of what is due, how much, etc”
• Change Jar Savings: Many places charge a convenience fee for automatic debit, esp if close to the due date. This turns me off to using it.
• Poorer Than You: Bill pay! Automatic transfers make me uneasy – I think about them all month, waiting for them to happen.
• MyAZNGreenWorld: I have BP set up to pay bills twice/month rather than have all bills go out at random times. Easier to ensure I have enough $.

Have you ever had a problem with automatic debit or using onine bill pay? What tips have help you to automate your finances?

Photo Credit: brendan.wood

• Joint Banking, Budgets, and Savings Joint budgeting has been a topic for the past few weeks on some personal finances sites. Several bloggers have been posting their financial maps. Personal Finance Hour had a great show on couples and finances with Jim and J.D sharing their differing opinions on how they handle their family's finances.......
• How to Be Rich Later and Live Well Now I’m thinking that many people share our goal to retire comfortably without taking a vow of poverty now. It’s definitely possible, but sacrifices will have to be made. There’s no free ride, it takes work. The trick is to decide what you’re willing to cut back on so you can......

• Paying off Debt in 9 Steps pt 1 Throwing away your bills and shredding your credit card payment reminders simply is not going to make the problem go away. Debt is going to hover over you until you find a way to deal with it. Interest will continue to compound, and payments will continue to climb until you......
• Finding the Right Bank A big portion of how you handle your finances will have a lot to do with the bank that you choose. In most cities, you should have quite a few choices, and with internet banking, it’s never been easier to find a new bank. However, before you open an account,......