by Thomas Schipani

Created on: July 23, 2008   Last Updated: August 11, 2008

It's the greatest thing since sliced bread as long as you follow a few simple and common sense rules.

Why Bank and Pay Bills On Line?
Lots of reasons. Instead of waiting for your monthly paper statement from your bank you can check and reconcile your balance every day. You don't have to be home to pay your bills. You save postage, paper and time. Nothing gets lost in the mail (well almost nothing). You have an advocate (the bill pay company) in dealing with any disputes. You never run out of on-line checks! The list goes on.

How it works.
On-line banking is relatively simple these days. Once you sign up, the bank makes your account information, statements etc. available on line via their web site. Usually you can see current balances and recent transactions and be able to transfer funds between accounts.

Bill pay is a bit more complex. With Bill Pay you need to set up the people and companies you want to pay, then specify the amount and timing of each payment. Once paid, you usually get a confirmation number for the payment. You should retain these payment confirmations (either on payment or in e-form)as they are a reference for any potential future issue regarding the payment.

When you are paying a large, well known company the funds can usually be transferred electronically. Your account will be debited on the same day the payment reaches the counterparty. Since there is no physical piece of paper, your bank statement is the only proof you have that the bill has been paid. Save your statements.

For payments to individuals or smaller companies the bill payer will create a paper check and mail it to the address you specified. This can take three to five business days to mail the check and another couple of days for it to get there. Be sure to build this lead time in to any time sensitive payments. Your account will be debited when the check is printed. The fact that your account has been debited does not necessarily mean that the counterparty has cashed the check!

Some companies also offer E Bills where the bill is sent directly to your bill payer. This is a great way to save paper and not have to worry about missing a bill if you are away from home.

Features to look for.

Get it for free!

On-line statements should have some history and available for free. Make sure you can download statements and bill pay activity to your own PC (e.g. Quicken).

Be sure there is more than just "enter your password" security. Something to prevent automated password hackers or "bots",

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