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7 Tricky Pitfalls To Online Bill Pay

Like most shortcuts in life, online bill pay has some serious downsides.

We love to love online bill pay.

It makes automating your finances possible. It saves tons of time in our go-go-go world.

But – like most shortcuts in life – online bill pay has some serious downsides. And I’m not just talking about our “friends” in Nigeria who are fishing for bank account numbers.

Hackers aside, there are plenty of other pitfalls to online bill pay.

Knowing to look out for these things before you use online bill pay will  help you stay on top of your finances and any automatic payments you set up to help achieve your goals.

1. Overdraft fees

You know that old saying “Quit it and forget it”?  Well, when you “quit” paying your bills and have the online gods do it for you (so nice of them) you can sometimes forget about upcoming bills. And since many online bill pay services require payment via a checking or savings account, you could get hit with hefty overdraft fees if your account is too low. Avoid the overdraft debacle by always keeping a cushion in your checking or saving accounts that are linked to online bill pay.

2. Stopping automatic payments

When you tell a company that they can have “X” amount of your money every month with no questions asked, they love it. They don’t want that cash flow to end. Ever. They can’t quit you (er, your bank account). There could be some situations when the company you’re paying needs a certain number of days’ notice before you quit online bill pay.  It’s usually not a big deal, but it could be if you’re tight on cash one month and need to cancel a service. It’s always important to read the fine print and see if it’s possible cancel at any time if necessary.  And if you can’t cancel, no biggie Just take note so you can give yourself some lead time in the event you do need to cancel.

3. The “I’m feeling richer” effect

When you’re not writing a check or manually making a payment every month, sometimes it feels like your bills have disappeared. 6,000 channels of HDTV and I don’t have to make a payment? Sign me up! But, wait … You’re still paying that bill, even if doesn’t truly feel like a bill when you’re just clicking some buttons.

Ever heard of Dave Ramsey? This is the reason why he touts the all cash method. He believes that if you pay for everything in cash, it “hurts” more when you buy something. This will likely help you keep your spending in check. Repeat after me: Online bill pay is merely a service – not an elimination of the actual bill.

4. Changes to your credit or debit card information

If you’re paying your bill with a credit card (to get points for rewards, etc.), the information on your credit card will (most likely) change periodically. For example, most credit cards have an expiration date that changes every two to five years. If any number changes on your credit card, you will need to update this information through your online bill pay account. This information includes: credit card number, expiration date and the three-digit security code on the back.

5. Address and name changes

Similar to the example above, if you’re using a credit card for online bill pay and your name or billing address change, you will need to update this information. If you don’t move or change your name frequently, this shouldn’t be a problem for you. But for many of us in our 20s, getting married and moving are such a big part of life that name and address change are almost a constant occurrence. Don’t forget to update all your financial accounts, including online bill pay when either of these things change.

6. Statement review

How many of you are guilty of paying your bill without even reviewing the charges? (You can’t see me, but my hand is sadly raised as I write this.) Shame on us! How many horror stories do we have to hear about scandalous banks before we finally realize we must always, ALWAYS double check their numbers.

Online bill pay almost makes it too easy to skip reviewing our account statement for errors. Don’t let the banks pull one over on you – review your statements!

7. Hidden fees

Ahh, hidden fees. Businesses and banks seem to say, “Let me make your life easier and pay your bills for you while you just sit back and relax!” Sounds nice, right? Wrong. Fees are a big way for businesses and banks to make money. They will tack them onto to any service they can.

Luckily, there are many banks and businesses that don’t charge fees for online bill pay, but some may. It’s always best to look over the fine print and check with your bank before paying bills online.

If you look over this list, all of these so-called “pitfalls” are easily manageable. You can still use online bill pay to your advantage as long as you’re aware of these possible problems.

As always, it’s about staying on top of your finances.  In this case, that involves reviewing your accounts and statements regularly and monitoring credit card/bank account information.  And, of course, not letting your spending get out of control!

What other disadvantages would you add to the list?

Published or updated on September 27, 2012

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About Amber Gilstrap

Amber is a twenty-something CPA from Kansas City, Missouri who loves writing, working out, and---of course---finding fresh ideas for saving money. Follow her on twitter @amberinks.


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  1. Zhen De Shou says:

    this advice lida daidaihua powerful account in reality functioned in my circumstances.

  2. BG says:

    I’m similar to many here. I pay everything I can online, but I do not use automatic payments from my checking account. I like to manually submit the payments, which ensures I don’t “forget” a bill is coming out.

    I do do some autopay to a credit card (phone, internet, and cable), but I do always check the statement. Also, all of those have been very easy to update card info when one changes (or I decided I want to put it on a different card).

  3. I keep a spreadsheet of all my expenses since I bought my house for tracking. Having to manually pay things online gives me the opportunity to update the spreadsheet.

  4. Kaitlyn says:

    I pay everything I can online (I actually lived for a year without writing one check, then I broke down and bought a check book). But, none are on automatic payment for the reasons listed above (and a healthy dose of paranoia).

    I love the convenience of paying online. I have all bills, amounts and due dates in my Google Calendar, and mark when I have paid them. It’s a system of checks and balances, and takes me less than 30 minutes a month.

    The key in any financial system is to figure out what works for you, stick to that, AND have a ready to go back up plan in case of glitches.

  5. Oh, #3 is SO true. I always feel like I’m getting these subscription services for free because they’re automatically withdrawn. I’m reminded when I check my statement.

  6. Ashley says:

    The only thing I don’t like about automatic payments is that I don’t have the option to take partial payments every two weeks.

  7. This is a great post! Other than bills that ‘have to be’ automated (mortgage etc) I’d rather set aside time each week and manually pay online for all these reasons listed. A friends of mine recently paid her car off but the monthly payment continued to come out for 3 months! She called and eventually got her money back but it was a huge pain.

  8. Pauline says:

    In rare occasions I have disagreed with the amount billed, and holding your manual payment is much easier to bargain than if your automatic bill is already paid and you are asking for your money back.

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