Saturday, January 21, 2017

Thrift Week 2017, Day 5: Pay Bills Online Day

Day 5 of the original Thrift Week was known as Pay Bills Promptly Day. These days, it's easy to do that with online bill payment, which is an ecofrugal choice for several reasons:
  • It's less work. It only takes me about a minute to log into my bank's online bill payment system, select the bill I want to pay, and enter the amount. That's a lot less work than writing out a check, adding my account number in the "memo" field, putting in an envelope, checking to make sure I've included all the necessary enclosures (facing in the right direction so the address shows through the window), labeling it, stamping it, sealing it, and then walking it down to the nearest mailbox. And since my time is a valuable resource, saving it is an ecofrugal move.
  • It's faster. When I click "pay bill" on the bank website, the payment doesn't go through instantly; usually it takes a day or two to be processed. However, that's still less time than it takes for a paper check to be picked up from my mailbox and delivered to Delaware or wherever the company is located—which means that if I realize I've only got two days before the bill is due, online payment is the best way to make sure it gets there on time and avoid being charged a late fee.
  • It's cheaper. Okay, a postage stamp only costs 47 cents—but when you multiply that by six bills a month, 12 months a year, it adds up to over $30 in postage every year. It's not that big an expense, but why pay it if I don't have to? (Plus I don't have to spend as much time standing in line at the post office to buy more stamps.) 
  • There's less paper waste. Paying my bills online means I can also receive them online, in PDF form, rather than in the mail. There are no more outer envelopes to discard—not to mention all those little paper inserts they throw in trying to sell you extra services.
  • Organization is easier. Back when I used to get paper bills in the mail, I had to store them away in file folders for future reference. After a while, the files got overstuffed, and I had to worry about when it was reasonable to pull old bills out and discard them. Now, I can store my e-bills right on my hard drive, where they take up a trivial amount of disk space and are easy to search.
Because of all these advantages, we now pay almost all our bills online. The only exceptions are the quarterly water and property tax bills; the borough has an online payment system, but there's a "convenience fee" to use it, so I just pay these in person down at borough hall.

Now, many financial sites and blogs argue that it would make more sense to automate our bill payments completely. That way, we wouldn't even have to go to the trouble of downloading them and logging into the online bill pay system. The bills would just go automatically to the bank, and the money would come automatically out of our checking account. It would take no effort at all on my part, and there would be no risk of ever being late with a payment. But I have three good reasons for not doing that:
  1. When I pay bills manually, I can make sure there's enough money in the checking account to cover the bill before paying it. If the bill just shows up and gets paid automatically, without warning, I might get caught short and end up having to pay an overdraft fee. (Our checking account is linked to savings, so the overdraft protection costs only $5 instead of $35, but I see no reason to pay even $5 if it's easy to avoid.
  2. Downloading the bill myself gives me a chance to review it and keep tabs on how much we're spending. If the electric bill is unusually high, for instance, I can think about what we might be doing to use more electricity than usual, and how we might be able to cut back.
  3. If there's an error on the bill, I can spot it and contact the issuer before paying. Once the bill's been paid, it's usually too late to dispute it—the money is gone, and there's no getting it back. Problems don't pop up all that often, but I've had them from time to time on my credit card bill (sometimes from mistakes and sometimes, more rarely, from fraudulent charges), and once I had a glitch in my utility bill that took the better part of two weeks to sort out.
So on the whole, I consider manual online payments—paying bills online, but reviewing them first—to be the most ecofrugal method. It takes a little more time than automatic payment, but it's easier to avoid errors and overdraft charges, and it helps keep track of spending. And the environmental benefits are the same either way.

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