by Laurel A Rockefeller

Created on: August 30, 2008   Last Updated: September 16, 2008

How many paper checks per month are you writing now compared to a year ago? If you are a tech-savvy consumer you might be writing only 2-3 per month. You might be writing zero. How is that possible? Simple: with online bill paying.

Here's how it works:

Every bank has a website dedicated to consumer accounts. If you have any doubt what that website is, just go to your branch or look it up on Google. Banks want you to find this information quickly. Then register for your online account using your existing checking and savings account information.

After you login you will see "bill pay." Navigate the menusthere's always a place for entering the payment address and account number for each bill you want to pay. Just enter in all the information, step by step, in the requested fields, save it for each bill you have to pay, then as you receive your bills, enter in the amounts and the dates you want them paid. Your bank does all the rest! If a paper check has to be created and mailed, your bank will issue that for you. And if the payment can be sent electronically, your bank will do that too.

In addition bill pay, your bank's website will also have money management tools. Rather than waiting for your statement each month, you'll be able to enter transactions on your account as your bank posts them. This is a valuable tool for your money management.

Beyond your bank, you can also pay bills on your individual service provider's websites. Here you are usually imputing your credit card information and/or creating a link between the service provider's account and your checking account, depending on the rules of the specific service provider.

For example, most credit card companies won't let you pay their card with another credit card, so you have to pay their bill with a link to your checking account. A link to your checking account typically involves giving them the routing number and your checking account number through which they can electronically transfer funds directly out of your account.

By contrast a cell phone provider usually will allow you to pay by credit card which is conducted just like any other online purchase you might choose to make. I typically choose to immediately follow up my credit card payment of my cell phone payment with an immediate payment to my credit card from my bank website for the same amount. This allows me to pay the bill in the method easiest for the cell phone website while still essentially paying for it right away from my checking account.

If you have a bill that you want to pay electronically but cannot be paid by any of the above methods, your next best method is Paypal. Ebay users know Paypal well because Ebay owns Paypal. Paypal works by uploading and downloading funds between its website and a user's checking account and sending money back and forth between users. Paypal also offers a money market option for some users-though this interest rate tends to be lower than many online banks. Paypal is a very convenient way to send money and is usually free to most users to use.

As you consider your online payment options, remember to always read the fine print and question any fees that you might see on your statements. Bill pay is almost always a free service. Look for service fees and flag anything that looks unusual. This is your money. Protect it!

Learn more about this author, Laurel A Rockefeller.
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