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But electronic payments sometimes can be held up when
they have to be processed manually. This is the case with smaller,
less automated billers. For example, if your gas company doesn't
accept electronic payments, your payment aggregator must cut and
mail a paper check. If that paper check doesn't have the required
back-up slip of paper documenting the transaction, it can get stuck
in limbo for several days.
As for security, it's not a big worry for most electronic
payment aficionados. All types of online financial transactions
are routinely encrypted to help reduce the possibility of identity
theft.
"It's a more secure situation," Utt says.
"I'm more comfortable paying bills online than having a waitress
carry around a receipt with my credit card number on it."
A recent identity theft study by Javelin Strategy
& Research, a company that advises businesses in the financial
services, payments and commerce sectors, agrees. Since much financial
fraud occurs when private data (checks, credit cards and account
statements) are stolen from mailboxes, the Javelin report argues
that electronic bill payment can actually reduce the chances of
identity theft.
In addition, bill payment sites offer guarantees.
For example, Wells-Fargo offers a "100 percent security and
payment guarantee," says Jim Smith, senior vice president of
consumer and Internet products.
Picking a preferred method
So you're ready to go electronic with your bills. But just which
way is best? That depends -- on you, how many of your billers accept
the payments, how much attention you want to pay to the process
once it's set up and, of course, the costs.
The most convenient method of paying bills electronically
is through a bill consolidator or aggregator. Using your bank, for
example, means you fill out electronic forms once and have only
one password and user name to remember.
In addition, many bill aggregators offer services
such as bill notification where you'll get an e-mail when a bill
comes due, as well as control over how you make the payment. You
can have the payments made automatically or you must approve the
amount and date the payment goes through.
Finally, if you use your bank, you have all your checking
account information on hand when paying bills. That way you'll know
if you have enough money in your account to pay your mortgage or
other bills.
Just make sure the fee to pay through your bank or
a third-party aggregator fits your budget.
Going to each biller directly isn't as easy as the
one-stop aggregation method. You have to set up accounts with each
vendor, learn how to navigate each system, remember separate user
names and passwords and visit each site monthly to pay. With the
average American household paying 15 to 20 bills a month, maintaining
that many online bill payment arrangements can be time-consuming
and potentially confusing.
However, with biller-direct payment, you can check
on each account's status when you go to pay. That way, you can verify
the charges before the money is transferred.
For automatic payments, credit cards score high. Establish
an automatic payment of that $48-a-month health club membership
via your Visa, and you're all set. Nothing to remember or to forget,
and you can pay multiple bills at once as with a regular aggregator.
If you prefer, most credit cards also give you the option to manually
pay the bills each month.
The downside of automatic credit card payments: If
you don't pay your account in full or on time, you'll be hit with
interest charges or late fees. But you can earn bonus points or
other award-program credits by regularly charging a bill to your
card.
Jenny C. McCune is a contributing
editor based in Montana.
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