How to Get out of Paying Your Bills – Forever

I never pay any of our bills. Neither does my husband. But they get paid. Every month and on time.

Now I’m not advocating ignoring your bills and racking up a ton of debt. That would be stupid and begging for bankruptcy. What I am advocating is never physically going through the process of paying the bills. While many have already figured out how to do this, there are many more that are still living in the old days.

I remember growing up and watching my mom go through the process of “paying bills.” She would sit down with all the bills she’d received in the mail, along with her checkbook, envelopes, and of course stamps. I didn’t pay much attention to what she was doing because I had more important things to do, like ride my bike. I still have more important things to do today (although riding my bike isn’t as high on the list as it used to be).

Introducing the beauty of the Internet and the ability to have your bills automatically paid for you. I never have to make sure I get a bill paid by its due date to avoid a late fee – it happens automatically. Stress free finances. Well one part can be stress free, that is.

Here are some basic tips to make the most of online bill paying:

Do more than just scrape by

Automatic bill payment works so well for me and my husband because we have money in the bank to pay all of our bills before they are due. If you are trying to scrape the money together to be able to pay a bill, then having it paid automatically probably won’t help you. But then again, neither will paying it late which will result in a hefty late fee and possible reduction of your credit score. Actually, when a bill is set to automatically come out of your checking account on a certain date, it ups the pressure to make sure the money is there, taking the option of paying late away, thus helping improve your credit score.

Use a credit card to pay bills

There are so many anti-credit card people out there claiming that credit cards are evil. I agree that if used in the wrong way, they can be harmful to your financial situation. But can’t anything that is used wrong be harmful in some way? The key is to using credit cards in the right way by paying them off at the end of the month before any interest accrues. It can go something like this: Many companies like Dish Network, Qwest, Cingular/AT&T, health clubs, newspaper services, and the list goes on and on, offer the option to pay your bill automatically when it is due, via a credit card. All you have to do is sign up and they will do the rest. You are told when the bill will be charged and you are warned ahead of time how much it will be. The nice thing about using a credit card is that you don’t have to keep track of when each bill comes out because the credit card statement is due at the same time every month so all your bills will essentially be due on the same day.

Automatically pay your credit card bill every month in full

Paying all your bills on your credit card automatically every month won’t help you if you don’t pay your credit card bill. So here’s a chance for another automatic payment. We have a Chase Visa card that we put most of our bills on each month. I set up an automatic payment so that the full balance at the end of every statement is taken out of our checking account automatically on the due date. No missed payments, no interest charges due to late payments. Paid in full every month. The key is to make sure you will have the money to do that and you can do this by having the money for every bill you put on the credit card in that account. You would normally write a check for the bill, right? Well instead of taking the money out right away, it will come out about a month later. The discipline is in not spending that money. Make sure you keep track of what bills you are charging.

Check their work

Look over your credit card statement periodically to make sure you don’t get overcharged for anything. Just because the payment is automatically made, doesn’t mean it’s automatically correct. Most credit card companies allow you to go online and check your current charges. I do this at least once a week to make sure things look good. The nice thing about using a credit card is that if someone does overcharge you, the money hasn’t come out of your account yet and usually you can get it resolved before the bill is due.

Use Online Bill Pay

Sadly, not all companies offer the ability to pay every month by a credit card. Our auto insurance & mortgage companies don’t, and neither does our sewer company. So here is where you can use online bill pay or EFT (electronic funds transfer). Even though we can’t pay our mortgage and auto insurance by credit card, we do have the ability to have those amounts deducted from our checking account at the same time every month (EFT). Again, I know its coming and when and as long as I don’t have to physically sit down and write a check and mail it out, I’m happy! With that said, our sewer company doesn’t even let me pay through EFT or by credit card, but I have found a way to pay them automatically as well. Our bank, as well as many other banks, offer free online bill pay. Once you sign up for online bill pay, you simply log on to your bank’s site, enter the payment information and account number for the bill you want to pay, as well as how much you want to pay and when, and your bank will send a check to that company – for free. No stamps needed. With our bank I signed up for the same amount to be sent for my sewer bill each month so I don’t even have to think about it.

Keep Track of Everything

I can’t stress this one enough. Keep a log somewhere or an excel spreadsheet of what bills are being charged when so you know what is going on in your account. If you have bills that are different amounts every month, annotate each month’s amount when the bill comes in the mail (or through e-mail). Even though you will save the work of manually paying every bill each month, you still need to do a little work to keep track of your spending. But hey, keeping a log of bills every month is a lot easier than remembering to pay all your bills on their different due dates.

It amazes me that will all this new technology and ability to make life easier, I still see people who mail in their checks for their bills. I personally hate checks, envelopes, stamps, and having to wait for my mail to get to where it needs to go. Hopefully this information can help someone get rid of a little clutter and stress in their life.

Helpful info on setting up online payments

Most companies have a website listed on their statement that you receive in the mail (including credit cards). If you go to that site and look for a link that says “online account access” or “pay your bill automatically” click it to find out how to set up an account.

*Note – Make sure you keep track of online usernames and passwords for all accounts by writing them down in a safe place so you don’t forget later on.

If you can’t find a website or don’t see the link, try calling the company and asking if they offer automatic payments. Most companies are more than happy to accommodate you because it ensures that they get paid in a timely manner every month.

Concerned about security?

So are most companies and that’s why many of them have taken extra steps to ensure your transactions are secure. Most companies offer information on their website about their security procedures and the measures they take to keep your transactions secure. In the 3 years that I’ve been paying my bills automatically, I’ve only had one unauthorized transaction on my credit card and all I had to do was call up my credit card company, tell them the charge wasn’t mine, fill out a little paperwork, and the charge was removed from my account. I have not had a problem since then.

Image courtesy of alykat

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17 Responses to How to Get out of Paying Your Bills – Forever

  1. Uri says:

    Keeping a low bank balance is usually a good idea because that money earns no or relatively low interest. There are other more significant reasons to avoid auto-pay though. Its very hard to tell when you are at risk of overdraft and no reasonable balance will protect you. Its not clear that auto-pay saves any effort since you still have to check not only that the charges are correct but also that the company didn’t miss any since they’ll still hold you responsible. Perhaps auto-pay reduces accidental late payments but increases accidental over-payments. I generally only subscribe to auto-payment on credit cards because mistakes are easier to correct and the buffer is free (unused credit).

  2. Annie J says:

    I won’t use auto pay, because our income tends to fluctuate. I don’t want automatic payments coming out of our account and risking an overdraft whenever we might be having a slow month. If I knew we were running short, I’d have to go in and change settings in order for a bill to NOT be paid automatically. Big hassle, IMO.

    However, I am a big advocate of on-line bill paying using the one-time-only method. Because the billing info is stored with my bank’s online screens from month to month, it still saves a lot of time over writing out checks and there’s no postage.

  3. princessperky says:

    I still ‘pay bills’ sometimes, but I do it with a click of a mouse, not with a pen and paper, almost free of it, and definitely prefer the one style of work to the other. (plus no stamps)

  4. vsjhoc says:

    I’m a big fan of automatic payment. But I always schedule payments a few days before the due date. You’re risking Murphy’s Law if you cut it too close. Some credit card companies won’t post your payment until midnight after the payment date you pick. Or the account you use to pay the bills may be inaccesible. Still, it beats stamps.

  5. Shannon C. says:

    I actually enjoy paying bills the old-fashioned way; it’s one of my favorite jobs around the house. It also helps me keep better track of our spending. Despite all the good reasons you give for not paying bills, I’m hoping that automatic payments don’t become the only way to pay in the future.

  6. Pingback: Around the PF Blogosphere: October 23, 2007 | The Sun’s Financial Diary | A Personal Finance Blog on Saving and Investing

  7. Shadox says:

    We have an account with Bank of America and use automatic bill pay to pay our rent. The nice thing is that it’s never late, and the money remains in our account until the check is cashed.

    We choose not to automatically pay our credit card bills because we ahve noticed a number of false charges on them over the years. We prefer to go over each line item before paying.

  8. dan says:

    I find it much more convenient to pay through automatic methods than trying to remember each month. I’m too forgetful and always seems to miss a payment here or there before switching.

  9. Maxine says:

    I don’t pay my bills automatically because I just don’t like the idea of anyone having direct acccess to my account. I like to feel that in case of an emergency, I can decide not to pay a certain bill, because there may be times in your life when you will gladly pay the late fee in order to fulfill an unexpected obligation. However, I am a strong advocate and user of the one time on line payment system and I use that every month. That way I have the best of both worlds. I don’t really like that credit card system of paying your bills….Something about that just doesn’t feel right. But again I stress the one time on line payments to beat that old fashioned check writing, stamp, mailing process. That is the best thing that the companies could have thought about.

  10. Mike D. says:

    I will be getting a $900 refund this year from my AMEX (Blue Cash)…I funnel everything I can through that card(Groceries, gas, multiple bills, etc) and pay off monthly. I wish I could do my mortgage too!

  11. Tim says:

    I try to run everything through my credit card when it comes to fixed monthly bills. This cuts down on my clutter, but then I do not have many bills. I am able to check deductions on the internet and use my checking account to pay off the balance. Using a credit card provides somewhat of a buffer over just letting someone autodraw on your account. The only thing I currently have auto-deduction on for my checking account is my car insurance. They don’t offer payment via credit card and charge more if you do lump sum payments for 6 months to a year.

  12. Diana Dixon says:

    i’m ok with auto pay..however, just going on line on or before my bills are due and paying them is just husband is in the army so we know exactly when and how much he gets paid so it is easier for us to figure what gets paid when..and at the end of each pay period onto the next..if there is any money left in the checking it automatically gets transferred into a savings account and we don’t miss it! best and easiest way to put money in the bank twice a month! it may be harder though for those who have incomes that fluctuate but it’s not impossible!

  13. Cindy M says:

    I autopay through my bank for all but my mortgage; that I do in person (I live within walking distance of them) as I pay extra and the online version doesn’t let you spell out where you want the extra put, for some reason. I use one credit card only and that is for gas for the car (a few cents cheaper per gallon this way) which I pay in full monthly. I like not carrying much cash at all on me and will use a debit card for the groceries when I go. My goal is to just not shop much at all and stay out of the stores, which is working amazingly well, that and not subscribing to the local newspaper, and I don’t miss the ads. I sure don’t miss writing checks.

  14. FinWhiz says:

    Credit cards are evil. If you use auto pay you never have to face up to the fact that you are spending wayyy tooo much money.

  15. ben says:

    How are you spending too much when you pay off your credit card each month? I actually get money back – I’m earning money by paying with a credit card.

  16. Danielle says:

    I am the owner of a small business and until recently have never offered my customers a way to pay their bills online or with recurring billing. After many of my customers were requesting another way to pay their bills, rather than by just mailing the payment, I started looking for an inexpensive company to work with. I ended up going with a company out of Colorado called and have not only found that a majority of my customers prefer online payments, but also that they also make my life a lot easier. Small businesses take note of these consumer comments! Though you may have a small number of people who still prefer a paper invoice, most would like a simpler way to pay you. I wish I had set it up sooner for my customers.

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