Payment Options

We hear it in commercials how using electronic transactions is easier than paying with checks.  How you can save time by having your account drafted every month.  And how you can use Bill Pay via your bank and send payments for monthly bills.  All of these methods are said to make our lives easier somehow.  It isn't our lives they are trying to make easier, it is their own!

People don't seem to understand how all this electronic banking works.  There are positives and negatives to all of it.  But, here's the skinny of it all.

Auto Drafts - This is when the company you owe removes the full amount owed to them (no matter how much it is) on a specific date.  The money is removed from your account before you even get to look at the bill or dispute the amount.  Once it's paid good luck trying to get it refunded.  Yes, auto drafts can and do still bounce.  Some companies offer discounts for setting up auto drafts because this form of payment is for their benefit and not yours.

Bill Pay - For those who like to see the bill before paying it and want to control who, how much, and when they spend money.   This kind of transaction may or may not be electronic.  If the person getting paid isn't set up in the banks system the bank will cut a paper check and mail it.  Most of the companies people pay on a monthly basis are set up and will be paid electronically, but not all.  The benefit to doing monthly bills this way is that you can schedule them to pay by a specific due date and if it's late the bank will pay the fees.  The down side is that you have to log into your account and enter the bill amount every month.  But, if you balance your checkbook monthly it really isn't much of a problem.


Checks - Not much to say about this one because everyone knows how they work.


If you have lots of money and aren't on a fixed income or living pay check to pay check then auto pay is for you.  If you just want the security of knowing that your in control and don't want to worry about how companies are protecting your banking information then bill pay or writing checks is for you.  The important thing is to not let anyone pressure you into letting them draft your account.  Remember it is your responsibility to take reasonable steps to protect yourself.  However you chose to do that is up to you.    If you really want to make it easier on yourself pay everything on a credit card.  Then you only have one bill that has to be paid in full every month.  You pay no finance charges, balancing your checkbook is easy, and you don't have to worry about bounced transactions.