One of the first changes we made to our finances after becoming suddenly frugal was switching to paperless billing, automatic debit and electronic payments for paying our bills, and it’s one of the frugality tips I’m sharing with you today, because it bears repeating. We switching to online bill pay after realizing that we’d paid hundreds in late charges and interest fees in the past, because we hadn’t been very good about sending bills in on time.
It wasn’t that we didn’t want to pay those bills. It was because we couldn’t find those bills on a regular basis and didn’t have a schedule for bill paying.
Sure, we could have made the decision to get more organized and create a system for paying bills, but we knew ourselves: we wouldn’t stick with it. On the other hand, we could spend a few weeks collecting and organizing our bills, and then entering them into our online banking system. And then from that day forward, we would arrange to have our bank send out payments so that we would never again send a bill payment in late.
I recommend using your bank for this online bill pay, as opposed to going to each biller’s website and using a credit card to pay your bills. First, this adds to your credit card balance. But second, it allows your finances to get out of control because you may not be able to keep track of which credit card is paying which bill.
We learned this latter point the hard way, after getting some bills this past fall from two companies through which we had subscriptions–a daily newspaper and our cable company. (See? We’re still learning, too!)
Years ago we’d logged onto their site and entered a credit card to cover the bills, and all was fine–until the credit card expired and we, forgetting that this credit card was “out there,” decided to cancel it. Suddenly, we were receiving late bills from these two companies because they had no way to collect our money.
Luckily, we caught that in time, before it dinged our credit report. But paying bills late not only hurts you financially, with the late fees and interest you need to pay, but also with regards to your credit report. The last thing you want is a bad credit report.
Also, some credit card companies have a clause in their agreements that they can raise your credit card rates if you pay late. So there’s another way that online bill pay can help you.
If you’re not sure where you may have auto-pay set up on your credit cards, make sure that you review at least three months worth of your credit cards statements. Why? Some subscriptions or auto-pay plans debit every quarter versus every month. Since some are annual fees, it probably wouldn’t hurt to look back over a year’s worth of credit card statements, too.
Look, we’ve changed banks since we started living frugally–and paying our bills online through our bank–in 2007. We did that because our big bank that was owned by a giant corporation was starting to institute huge fees for things like online bill pay that had been free in the past. We switched to a smaller, local bank that offered all of those services we wanted–including online bill pay–and didn’t charge extra for it. Switching was a pain, to be sure, but after the initial inconvenience of having to update all of our bills, I’m pleased to report that we haven’t incurred a late fee in years through online bill pay through our bank!
If you handle your bills like we used to–with lots of bill payments sent late and interest charges adding up, you may be concerned about your credit rating. Thanks to one of my affiliate relationships, you can get a free credit report through Credit Sesame.