What is online bill pay?

About online bill pay

Online bill pay is the process of paying creditors electronically, effectively transferring money from the consumer’s bank account to the account of the creditor. This can be one of the greatest advantages of online checking accounts. In some cases, this type of service can be free for consumers who meet certain qualifications, such as a minimum balance requirement.

Depending on your bank’s policies, online bill pay may also have another benefit – allowing consumers to set up recurring payment, for bills that are billed at the same amount each month or to pay creditors a fixed amount. Even though the money paid via online bill pay is immediately withdrawn from the consumer’s account, it may not be immediately deposited into the creditor’s account.

Although most major utilities and credit card companies accept electronic payments, not all creditors do. In those cases, the bank issues a check and delivers it to the creditor. This can add a few days to the process, as well. Therefore, to avoid late fees from creditors, consumers must make sure to pay bills, or schedule payments, at least a few days prior to the due date.

Another benefit of online bill payment is the opportunity to review payment activity – by date, by creditor, etc., which can greatly help with record keeping.