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How Online Bill Paying Works


Online Bill Paying Features
Some people appreciate the face-to-face customer service that comes with going to a bank. Others are more than willing to say bye to their teller.
Some people appreciate the face-to-face customer service that comes with going to a bank. Others are more than willing to say bye to their teller.
Ryan McVay/Digital Vision/Getty Images

Setting up online bill paying is usually a straightforward process. If you decide to pay bills through your bank (more about the other choices you have on the next page), just go to its Web site and register. Then enter the pertinent information about the bills that need paying, which account you'd like the money to come out of and whether you'd like to set up automatic payments or take care of matters yourself each month. Typically you're then good to go.

Apart from just receiving and paying bills, with online banking you can also accomplish tasks like keeping track of your transactions, setting up money transfers and seeing images of cancelled checks. You can often sign up to receive e-mail alerts that deliver different notifications in the case of low funds or unusual activity. Some Web sites also offer budgeting tools, while others are compatible with financial planning software like Quicken.

Some of these activities may carry a fee depending on who you're dealing with. Be sure you know your bank's policy or a surprise fee could push you into the red and earn you an additional overdraft fee for your troubles. Also, in regard to online bill paying in particular, it's a good idea to make sure your money gets where it needs to go each month -- even if you've set up recurring payments -- because sometimes a company can change part of its billing information and your bank won't be able to deliver the funds.

Now that we've covered what online bill paying and banking have to offer, we'll delve into how the online experience differs from traditional banking, and how they stack up against each other in terms of security.