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Mon Feb 11, 2013, 11:22 AM

are paying bills online always better than writing checks?

My daughter just turned 18. She receives a SSDI check because my husband is disabled and she is still in her senior year of high school. She has opened a checking account and has started writing us checks to pay for her share of rent, groceries, utilities, ect. I've also been trying to teach her to spend cash intead of using her debit card. I've told her that dealing with money is very psychological and you always need to be aware of what you are spending. You need to feel the sting so to speak so you limit how much you spend. That got me thinking about the debate about how many people mail in their bills versus how many pay their bills online. Now there are two types of online bill paying. You can physically pay your bill yourself or you can have automatic payments withdrawn from your account. I physically pay a few bills online, have a few automatically withdrawn from my account, and there are a couple I still write a check for and send in the mail. And I know for me, if I have to physically do something to pay the bill I realize I am spending money. Even if it is an online payment, if I have to type the payment amount in, it clicks. I realize I am spending money. Obviously having a bill paid automatically you won't be late which is good. But do you really feel it? Do you sometimes forget you even have that bill until you look at your account balance and wonder where your money has gone? Personally, I'm glad we have all these different options. I use quite a few of the different options, but it really makes me think about what form of payment I am using. I guess that is the point. Thinking about what you are spending.

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Arrow 32 replies Author Time Post
Reply are paying bills online always better than writing checks? (Original post)
liberal_at_heart Feb 2013 OP
Fresh_Start Feb 2013 #1
liberal_at_heart Feb 2013 #4
Fresh_Start Feb 2013 #8
nadinbrzezinski Feb 2013 #2
liberal_at_heart Feb 2013 #6
nadinbrzezinski Feb 2013 #13
midnight Feb 2013 #18
csziggy Feb 2013 #3
nadinbrzezinski Feb 2013 #14
csziggy Feb 2013 #32
MADem Feb 2013 #5
SayWut Feb 2013 #12
MADem Feb 2013 #15
SayWut Feb 2013 #19
MADem Feb 2013 #24
HERVEPA Feb 2013 #7
IphengeniaBlumgarten Feb 2013 #20
HERVEPA Feb 2013 #21
TheBlackAdder Feb 2013 #9
nc4bo Feb 2013 #10
PasadenaTrudy Feb 2013 #11
yellowcanine Feb 2013 #16
HERVEPA Feb 2013 #22
yellowcanine Feb 2013 #25
Go Vols Feb 2013 #17
RebelOne Feb 2013 #23
Buns_of_Fire Feb 2013 #26
patrice Feb 2013 #27
backscatter712 Feb 2013 #28
SheilaT Feb 2013 #29
Egalitarian Thug Feb 2013 #30
lastlib Feb 2013 #31

Response to liberal_at_heart (Original post)

Mon Feb 11, 2013, 11:26 AM

1. I pay every bill I can online and automatically.

My husband writes checks for his bills.
Of the two of us, I am by far the most conscientious with money.
I pay the big bills in the household, the mortgage and taxes for example.
So its not that my payments are less significant.

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Response to Fresh_Start (Reply #1)

Mon Feb 11, 2013, 11:33 AM

4. I've started going over my bank statement every month so I can keep track of the automatic payments

For me, I have to look at it, see it, and sometimes even write it down for it to register. I do have a few automatic payments and if I go through my statement, look at it, and write it down(kind of like balancing a check book) it seems to register better for me. Otherwise I forget I even have those bills. If you don't have to do that then that's great. Whatever works.

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Response to liberal_at_heart (Reply #4)

Mon Feb 11, 2013, 11:38 AM

8. Even though I have bill payment and pay online

I look at every bill.
Especially credit card bills because there is always the chance of fraudulent charges.
I also look at utility bills and try to take advantage of all the discounts...(if you reduce your electricity usage by 20% for the next 3 months, we'll rebate an additional 20%)...
It shouldn't be on autopilot....its just an additional tool to make it easier to stay on top.

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Response to liberal_at_heart (Original post)

Mon Feb 11, 2013, 11:27 AM

2. Des she have a smart phone? If not a simple notebook and pen will do

Tell her to track all her expenses, and I mean all of them, to the last penny. It's educational.

There are good apps for that.

I still like to go out for coffee from time to time, but I know that is upwards of ten bucks a week if every day. (Why i don't do it every day and only when I need to go to the store).

That is even better than spending cash instead of her debit card.

If she tracks it that way, she will be able to have that same connection.

In fact, since I no longer carry my iPod, need to get one for the phone.

It used to be a drag, now it just is one thing I do. And have managed to cut down expenses and still save.

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Response to nadinbrzezinski (Reply #2)

Mon Feb 11, 2013, 11:36 AM

6. She uses her phone constantly all day. Maybe an app would be a good idea for her. Thank you.

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Response to liberal_at_heart (Reply #6)

Mon Feb 11, 2013, 11:56 AM

13. I just downloaded one to my android

It's free. Called Toshi Finance Expenses

It has good reviews, and it looks easy.

Thanks for the reminder. I got out of the habit for four months, and I still needed to scramble to find 200 extra...since found. I considered cutting phone and cabe.

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Response to nadinbrzezinski (Reply #13)

Mon Feb 11, 2013, 12:05 PM

18. Interesting idea. I just went to their site and will have to look into this for the family. Thanks.

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Response to liberal_at_heart (Original post)

Mon Feb 11, 2013, 11:30 AM

3. I HAVE to stay aware of when the money is going out of my account

Otherwise, the money won't be there when a bill has to be paid.

When I first started using online Bill Pay I'd forget about which bills were due to be paid on which days of the month. I made a mess out of my account doing that.

Now I have to keep a cushion so the automatic payments will always clear. So I stat aware of where the balance is, I get an email from my bank every morning with the account balance. If it suddenly changes when I don't expect it, I go online to see what expenses have gone out. I stay on top of where my money is going more than when I was manually entering checks and cash expenses in Quicken!

I'm not a parent but I think for a young person it might be easier to learn to budget with physical money rather than electronic, though if your daughter is a computer user, she may adapt to electronic money better than my generation did.

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Response to csziggy (Reply #3)

Mon Feb 11, 2013, 11:58 AM

14. I check my account every so often as well

We only have one auto pay, health insurance. The rest are done the old way

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Response to nadinbrzezinski (Reply #14)

Mon Feb 11, 2013, 04:16 PM

32. I like getting the email every day with the balance

Especially since over the last ten years I have moved more bills to auto pay or pay through direct payments from my checking account.

With all the operations I've had in the last ten years and being on pain meds so much, it's saved me a LOT of money and headaches. I'd lose the bills or just forget to pay them, even with the envelopes sitting on my desk.

And of course last year with the two knee replacements, I was completely out of it too much to be reliable about keeping track of bills. That was when I moved nearly everything to autopay, even setting up recurring payments for my credit cards.

Then I found that the recurring payments got me caught up with my payments better - to the point that only one card has any balance and it comes close to being paid completely as I use it and the payments arrive.

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Response to liberal_at_heart (Original post)

Mon Feb 11, 2013, 11:36 AM

5. Auto-pay will improve the credit rating--there's no chance of forgetting.

What your daughter needs to do is sit down with her bank statement every month, and -- without exception--read it carefully, line by line, like a novel. If she can develop this discipline, I think she will get the picture. She will have an awareness of where her money has gone, and see the cash in/cash out.

Cash for incidentals, IMO, is always a better bet than swiping the card at the 7-11, for example. I do agree with that entirely.

I pay just a few bills by check--one occurs annually, and the payee isn't an "online" agency, so I have no choice. I sometimes mail it, sometimes deliver it by hand. I have a couple of other bills where there is no "online payment" capability, so my choice is to either pay every month or--my preferred method--pay in advance for a year so I don't have to deal w/the bills.

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Response to MADem (Reply #5)

Mon Feb 11, 2013, 11:53 AM

12. I think there's two sides to that.

 

If a person uses automatic payments to pay bills, utilities, etc, it would be beneficial to their credit rating as the bills will always be paid on time.
However, if a person uses automatic payments to pay off a loan (car, personal,etc), it won't be accepted, or applied towards applying for credit, or upping ones credit rating.
In that regard, it's not harmful to ones credit rating, but it doesn't improve it either.

Banks, lenders want to see some history of responsibility or accountability in paying off debts.

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Response to SayWut (Reply #12)

Mon Feb 11, 2013, 12:03 PM

15. That's news to me!

I was an early adapter to that whole "direct debit" paradigm many, many decades ago (I had a car loan w/my credit union) and it did seem to be helpful when I went to buy a house, but who knows?

Nowadays, the paradigm is to pay automatically when one can; and pay electronically/individually when one is "juggling" expenses, but the whole "pay by check/mail it in" model is going by the wayside rather quickly.

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Response to MADem (Reply #15)

Mon Feb 11, 2013, 12:19 PM

19. Perhaps it's up to the specific lender or CC issuer?

 

My experience was similar to yours, with different results.
I too was an early adapter to "direct debit" (payroll deduction), payable to my Credit Union, for a car loan.
I was informed at the time (by my Credit Union), that by choosing to pay off my loan via payroll deduction, that it would not be applicable towards future loans or establishing credit history (this was in the early 80's).

Anyhow, back to the original subject, I pay roughly %90 of my bills online, and have been doing so for at least 4 years now. I write approximately 20 hard checks per year: monthly rent, and the odd, occasional personal check and bushiness that aren't set-up for electronic payments. The convenience and savings can't be beat.

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Response to SayWut (Reply #19)

Mon Feb 11, 2013, 12:58 PM

24. Who knows--I think these basstids make up "the rules" as they go along! nt

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Response to liberal_at_heart (Original post)

Mon Feb 11, 2013, 11:38 AM

7. Pay every bill that I can on-line with credit card

You are throwing away money if you aren't using a credit card that gets you at least 2% back.
Of couse this doesn't apply if you don't have self-discipline, or have bad credit and can't get a credit card.

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Response to HERVEPA (Reply #7)

Mon Feb 11, 2013, 12:30 PM

20. Cards that give you a 2% reward..

These cards will have a higher interest rate on unpaid balances than do the non-rebate cards. So this strategy will probably only be a good one if you normally pay off your credit card in full each month.

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Response to IphengeniaBlumgarten (Reply #20)

Mon Feb 11, 2013, 12:43 PM

21. Always pay it off every month.

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Response to liberal_at_heart (Original post)

Mon Feb 11, 2013, 11:39 AM

9. ONLY pay bills online. There are reasons for that.

1) When you mail something, there is a paper copy that can be intercepted at your mailbox before the postal service picks it up or is subject to the firm's document destruction practices. Many companies do not shred documents they discard.

2) When you electronically submit your payment, many times they are hitting the same back-end systems that the check processors key your payment into. Just make sure that you have all of your most recent security updates on you PC and have a SSL key on your browser. Some phone implementations still pose a risk even though the providers claim full security.

3) When you pay by check, you are at the whim of the recipient to process that check before the due date. There were a group of firms that stood on a check for up to 5 days before processing the check. If you mail your check a week before the due date, you might find your payment posted as being late and kicked up into the default rate tier. This will have dramatic effects on your credit rating, impact your interest rates you pay for loans, possibly prevent a mortgage application from going through... and other banks might raise you into the default rate because you were late paying another firm's bill on time.

4) When you pay online, you will get a confirmation number, an email confirmation of payment and see the EFT withdrawal occur overnight or on your planned payment date you've selected. This is your only protection to a claim that you've submitted a late payment. If you mail a check... you can't really prove anything.

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Response to liberal_at_heart (Original post)

Mon Feb 11, 2013, 11:43 AM

10. Prefer paying online via debit card - still experience that stinging sensation of money out the door

But nothing is automatic - keep your paws out of my account. I just feel like it's my money until I give it to you.

I use a re-loadable debit card for spending/paying. So every month, I gather all my account statements for that month, add them up, go reload the card with that amount (perhaps a couple dollars more) then go online and pay my bills. I have one account that's paperless billing and I receive the monthly statement via email.

So yea, I absolutely still have the feeling of paying the bills (and missing the cash) but it's much more convenient to just sit down at the pc and pay them each month.


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Response to liberal_at_heart (Original post)

Mon Feb 11, 2013, 11:46 AM

11. I pay all bills online

I check my checking and savings balance with my credit union online too. I'm all for moving along with technology, and online banking is just the direction we are moving in. Plus I dreaded sitting down and writing out checks

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Response to liberal_at_heart (Original post)

Mon Feb 11, 2013, 12:04 PM

16. An advantage of checks is it is several days before it actually comes out of your account.

OTOH it is easier to pay the bill on time and still get a late payment fee because the mail was slow or the company processed the check slowly when it did get it.

Personally, I like the level of control of paying the bill exactly when I want to so I do most of mine manually on line.

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Response to yellowcanine (Reply #16)

Mon Feb 11, 2013, 12:45 PM

22. on-line you can specify when it will come out of your account

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Response to HERVEPA (Reply #22)

Mon Feb 11, 2013, 01:14 PM

25. But with a paper check you can get credited for the payment based on the check and it

does not come out of your account until the check clears. So you avoid late fees even while actually paying a couple of days late. This is getting harder as banks go to electronic processing of checks of course. So now the electronic payment is probably better for cutting things tight in terms of payment.

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Response to liberal_at_heart (Original post)

Mon Feb 11, 2013, 12:04 PM

17. I pay most

by automatic bank draft,1 online.Its easier because I would forget to mail things in before I started this about 10 years ago.

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Response to liberal_at_heart (Original post)

Mon Feb 11, 2013, 12:52 PM

23. All my bills are paid online through my bank or automatic withdrawal.

I am saving money on checks and stamps. Let the bank pay for the stamp.

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Response to liberal_at_heart (Original post)

Mon Feb 11, 2013, 01:18 PM

26. I tend to write the checks and pay by mail for one reason and one reason only:

The 46 cents I spend for the stamp is going to to the USPS. It won't break me one way or the other, and the USPS can use the money. They mean more to me than the five bucks a month or so I spend for stamps.

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Response to liberal_at_heart (Original post)

Mon Feb 11, 2013, 01:24 PM

27. I have noticed some SERIOUS digit-float-time. I'm not sure whether it's my bank's software

or what, but there appear to be holes in the account views, in which something you've done - paying bills - is out there, but you CAN'T see it in any of the different reports for your account. I mean it, because I have looked at it every way possible, and a user really cannot tell, from looking at the various kinds of "balances", or available payment histories, that those digits are out there. I think it has something to do with what WAS scheduled and RECENTLY paid vs. what is scheduled to be paid next.

I also do not understand why bank computers can't be programed to do their jobs on Saturday, Sunday, and holidays. WTF???

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Response to liberal_at_heart (Original post)

Mon Feb 11, 2013, 01:26 PM

28. It's certainly more convenient.

You're right in that if you're not handling actual cash, the money, psychologically speaking, doesn't feel "real", and thus you have more of a propensity to spend it.

But I do pay my bills online - it's incredibly convenient, and I track my money using my bank's web site.

It also doesn't hurt to put together a budget - fire up Excel or your spreadsheet of choice, start tracking your expenses, set some targets, and keep yourself in the black.

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Response to liberal_at_heart (Original post)

Mon Feb 11, 2013, 01:33 PM

29. I'm with the "Pay as many bills as you can on-line"

crowd.

And absolutely, try very hard to persuade her to use cash for day-to-day purchases.

Personally, aside from paying as many of my bills on-line as possible, I use the envelope system for everything else. At the beginning of the week I go to the ATM and take out the sum of money I've figured out works for me. My envelopes are labelled: Gas, Health and Well Being, Clothes, Entertainment, and Miscellaneous. What doesn't go into the envelopes stays in my wallet and is mainly grocery money.

I've noticed that younger people who use their debit cards all the time never have any money left over at the end of the pay period. Never. They spend it all. I think that actually paying cash for the cups of coffee and so on is a very good idea.

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Response to liberal_at_heart (Original post)

Mon Feb 11, 2013, 01:51 PM

30. K&R You are absolutely right. Paying online is convenient, but there is a much greater potential

 

for hassle when things don't work as they're supposed to. Automatic withdrawals are terrible. It is easy to start, frequently very hard to stop.

I love cash. It has a double psychological effect; One is that it focuses you on how much you are spending. The other is the effect it has on the person you are buying from, especially for larger purchases. I've saved many thousands of dollars paying less over the years by pulling out a wad of cash that, while it is significantly less than what the seller asked, seeing that money is a powerful incentive to let the item go.

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Response to liberal_at_heart (Original post)

Mon Feb 11, 2013, 02:10 PM

31. I have fundamental philosophical objections....

to giving strangers access to my bank account. So I don't pay bills online. Plus, when I physically write a check, I "feel" the money going out of my account, so I'm a little more in tune with how much I'm spending. When you do it all with a simple mouse-click, you don't feel any pain or emotion.

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