9 reasons to use online bill pay

By Julie Bawden-Davis

If you're still licking envelopes and mailing your regular payments, online bill payment could be a great way to simplify your monthly routine. Paying your creditors electronically offers a variety of enticing advantages over traditional bill-paying methods.

According to Fiserv, Inc., paying bills online through a banking institution or directly to a service provider is increasing in popularity. As of 2010, 72.5 million U.S. households used online banking, and the number of individuals paying bills through cyberspace keeps rising.

If you haven't made the switch yourself, consider these compelling reasons for ditching the stamp-and-envelope routine:

1. It's convenient

Online bill pay allows you to pay your bills quickly and without leaving home. Rather than the time-consuming chore of writing out checks, putting the bills in envelopes and transporting them to the post office, you simply click and pay. And if you set up automatic bill pay, you can use the time otherwise spent on bookkeeping pursuing other interests.

Going paperless also saves you the hassle of having to organize, file and store paperwork.

2. It can preserve your credit

Lenders look at the timeliness of your payments when considering you for credit cards and loans. Even when you mail payments early, there is always a chance that bills can get lost or held up in the mail. Online bill pay is accurate and timely, reducing the likelihood of late, missed or incomplete payments, which can help keep your credit pristine.

Reminders through the payment system can also alert you when a payment date is approaching so you can make sure there is sufficient money in your checking account. In many case, you can also set up an alternate method of payment if there are ever insufficient funds in your primary account to cover your bills.

3. It offers security

Identity thieves can to steal your financial information from paper bills found in the trash or intercepted in the mail, but the various security layers involved in online payments, such as encryption and personalized log-in information, make electronic bill payment more secure in most instances.

4. It's cost-effective

Most online bill pay systems are free to use, and not having to mail your bills means reduced postage costs. If you mail 12 bills a month at 44 cents a piece, that equals a savings of $63.36 a year -- not to mention the cost of gas if you have to travel to the post office. Online bill pay also guarantees that you won't fork over late charge fees.

5. It's good for the environment

Paperless billing eliminates the need for substantial amounts of paper. According to a 2007 study by Javelin Strategy & Research, online bill pay and the resulting reduction in paper and its processing can save an astounding 17 million trees and prevent 4 billion tons of greenhouse gases from escaping into the environment each year. Paying online also means less paper waste filling landfills.

6. It centralizes your information

An online bill pay system creates a centralized repository of all of your bills, statements and payments. This reduces the clutter produced by piles of paper bills and allows you to be more organized.

When you need to review a particular account, instead of sifting through paperwork, you simply log on and can pull up the entire charge and payment history in minutes. Such a system makes it easy to perform tasks such as retrieving receipts, preparing for taxes, filling out mortgage paperwork and determining net worth.

7. It offers more financial control

When it comes to budgeting, having all of your bill information on your computer can give you a better idea of where your money is going and what your overall financial picture looks like. This opportunity to analyze your bills gives you the necessary information to create an effective budget and make appropriate cuts in spending where necessary.

8. It can streamline saving

When you set up your online bill pay, you can also arrange for automatic withdrawals from your checking account to your saving account. This strategy of treating your savings as a required online bill can help you painlessly build up your emergency savings fund or stash money for a goal, such as a buying a new home or a funding a vacation.

9. It can reduce stress

Few things elevate your blood pressure more quickly than discovering a past-due bill. Knowing that all of your payments are being funneled into a reliable online bill payment system can help you breathe easier.

Old habits can be hard to break, but it's unlikely you'll want to go back to stamps and envelopes once you get used to paying your bills online. While you may have many years of mailing your bills in your past, that's probably where they should stay.