What Is Online Bill Pay and How Do You Use It?

What Is Online Bill Pay?

Online bill pay is a service many banks and credit unions offer customers to help them make one-time or recurring electronic bill payments. You can typically schedule these from one central dashboard in a mobile app or via online banking.

This system can be a fast and convenient way to manage, track and pay bills directly from a linked checking or savings account. It's often free, though you may need to pay a rush fee for a faster delivery.

Many banks and credit unions guarantee on-time delivery as long as you have enough money in your account to cover the bills and your payments are scheduled in advance. If the institution causes your payment to be late, it typically reimburses you for any late fees.

Learn more: How to Improve Your Payment History

How Does Online Bill Pay Work?

Online bill pay is designed for simplicity. After logging in to your bank account and navigating to the bill pay dashboard, you'll add payees, which are people or companies you plan to send payments to.

You can usually maintain a list of payees with details like bill due date, payment amount and pay method. From there, you'll schedule immediate or future payments and can set them as recurring. The bank electronically routes your payments to any payees who can accept them. For payees that do not accept electronic payments, the bank will mail a check and cover the postage on your behalf.

You may also sign up for alerts or notifications related to your bill payments.

Online Bill Pay vs. Autopay

Online bill pay and autopay are two ways you can pay your bills electronically. The key difference between them is which provider initiates the process.

• With online bill pay, your bank sends payments to your creditor or provider from your account. This option is good for one-time bills, such as tax payments, and predictable recurring bills, such as loan payments, insurance bills and child care tuition.
• With autopay, your creditor or provider pulls money from your account. Autopay is a good fit for recurring bills that change monthly, such as credit card and utility bills. This can be easier than "pushing" the payment from your bank to the creditor or service provider each month.

If you want to use online bill pay for all your payments, you could check to see whether your service provider offers electronic bills that can be sent directly to your bank. If it does, you may be able to add the company as a payee, sign up for electronic bills and then set up automatic bill payments for the amount. Or, the provider can notify you when the bill arrives and you could manually make the payments.

How to Set Up Online Bill Pay

To set up online bill pay, you'll need a list of your providers along with your account details and information about your payments. Here's how to get started:

1. Create an online account. If you haven't already, create an online account on your bank's website. Log in and navigate to the bill pay dashboard, then sign up for the service. If you have specific questions, you can look for help on the site or contact the institution directly.
2. Add payees. Here's where you'll add people and companies you want to pay. You may be able to choose from a list of providers, manually enter the information or upload a picture of a bill. You can set reminders or alerts to track when each bill is due.
3. Add account details. For each bill, the bank will need details like company name, billing address, account number, payment amount and payment delivery date. You may also be able to give each payee account a nickname to make them easier to identify.
4. Schedule your first payment. Once you add payees to your account, you can schedule immediate or future payments. It can take a few days for companies to receive the funds, so consider scheduling the payment before the due date.
5. Monitor your accounts. You may be able to ask your bank to send an email confirmation of your payments. Get into the habit of checking these and verifying your scheduled payments are made on time and in full. This keeps your accounts in good standing and helps you maintain healthy credit. Your financial institution may reimburse any late fees if it's responsible for delaying your payment.

Learn more: Can Automatic Bill Payments Help My Credit Score?

Make Online Bill Pay Part of Monitoring Your Finances

Many people have recurring payments for loans, rent and subscriptions, and online bill pay is a convenient way to ensure those bills are paid on time. You can also add other payees that you frequently pay, even if they're not on a regular schedule or a fixed amount.

You may also want to consider other easy and free ways to manage your finances, such as monitoring your Experian credit report and FICO^® Score^Θ for free online. And if you're paying bills from your bank account, Experian Boost^®ø may help you get credit for your on-time phone, utility and streaming service payments.