1Automatic Bill Pay Basics

When you enroll in automatic bill pay programs you remove the need to write and mail in a check.

There are, essentially, two different types of automatic payments that can be set up in automatic bill pay programs.

You can set up bill payment through your bank or you can do it through individual companies you need to make payment to.

2Pay Bills Individually

Many banks now offer their customers the option to set up automatic electronic payments through their online payment system. Simply log in to your checking account and set up the accounts in the online payment system.

When you receive a bill you can log into your checking account and quickly input the amount of the bill. The bill will then be paid by your bank, on your behalf.

This can be used whether the bank receives the bill electronically, or whether you still receive a paper bill in the mail.

3Automatic Bill Pay Through Your Bank

Many accounts can be set up to automatically make payment on your bills. Bills that always come on the same day and are for the same amount can be set up to automatically be paid from your checking account on the day you specify.

Some people even choose to set up automated payment on items that sometimes have different amounts. The key is to make sure to set up the amount as something that will ALWAYS be more then the bill amount could be.

This automated bill payment function can only be used with bills that can be received electronically through your bank. When you set up your automatic bill pay system, the system will tell you whether they have the ability to receive a bill from a specific company.

4Automatic Bill Pay With Your Creditors

Setting up an automatic bill pay schedule with your creditors, (i.e. the businesses and services that send you monthly bills), will allow you to ensure that your bills are always paid on time and when they are due.

It will be much easier to keep track of your finances if you only use this option for bills that cannot be handled electronically by your bank.

Keep in mind that your creditor may prefer this method, but it will likely be more difficult for you to manage. If all of your payments occur through your bank’s system, all of you bills are in the same place. If you set up some automated payments directly with companies, you will have to remember to that the amount will be automatically deducted.

One situation when this may be more convenient is to set up with your credit card companies to automatically withdraw the minimum payment amount. However, you will still have to remember that the amount will be deducted automatically when you are looking at the available funds in your bank account.

5Setting Up Your Automatic Bill Pay Programs

The first step you to do is to create a spreadsheet of all of the bills that you receive on a monthly basis. Track the name of the company, the date that the bill was received, the due date and the amount that is being charged on the bill.

For each bill you have, determine the following:

• • If the due date is the same each month
• • If the amount due is the same each month
• • When you want the amount due deducted from your checking account

It makes sense to have the amounts deducted relatively soon after your paycheck is deposited so you aren’t tempted to spend that money on other items. However, you also need to consider there are sometimes delays due to weekends, holidays, etc. Don’t set up an automatic bill pay too close to your pay check deposit date.

Go through each bill and see if your bank has the ability to receive an electronic bill from them. Input the information into the system. You will likely need to have access to your account number, the mailing address for the creditor and any passwords you may have on the account.

Set up your bills to be paid. Make sure you allow several days for the payment to be made. It’s not a good idea to set up an automatic bill pay for only a day before the bill is due. Most companies recommend 3 – 5 days.

6Automatic Bill Pay Doesn’t Mean You Can Forget About It

Keep in mind that while automatic bill pay programs are ideal for helping you to keep your bill paying on track while simultaneously cutting down the amount of time you devote to paying bills, it is still necessary to closely monitor your checking account.

You need to be aware of what is happening with you money to be sure that the process is all working as you expected it to. It’s also important to monitor your bills to make sure there are no surprises in the amount that will be charged to your bank.

Has setting up automatic bill payments saved you a lot of time and money? How much money, on average? Have you seen an improvement in your credit score since starting to set up auto payments? Do you have any tips for someone just getting started?