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Choosing How to Pay Bills

In general, you can pay your bills using:

  • Cash
  • Checks
  • Credit or debit cards
  • Money orders
  • Online or mobile bill payments
  • Prepaid cards

Picking a method that helps you consistently pay your bills on time can help you build a payment record that may improve your ability to access credit.

There are benefits and drawbacks to each method. For example, if you prefer to pay bills in-person using cash, you have to get to a payment location, which costs you time and gas money or transit fare. If you use automatic bill payment from a checking account, you’ll save time, but you'll need to make sure you have enough money in the account to cover the payment. Otherwise, you may risk a rejected payment or an overdraft fee. If you pay by credit card and can’t pay off the balance in full each month, you’ll have to pay interest, which will add to what you owe.

What to do

  • Read through the bill payment methods below
  • Some features can be either advantages or disadvantages, depending on what's important to you
  • Remember you don't have to pick just one payment method for all your bills. For example, you might put your rent or mortgage on automatic payment, but pay your other bills one by one with cash
  • Write down questions you have about options you think could be right for you
Choosing How to Pay Bills
    Benefits Risks
 

Cash

  • Easy to use and understand
  • There are often no fees, unlike getting a money order or a prepaid card
  • Requires bills be paid in person
  • Difficult to prove payment unless you have a receipt
  • May be stolen
 

Check

  • Convenient once checking account is set up
  • Can be mailed
  • Easy to prove payment if there's a dispute
  • Funds in the checking account are secure
  • Likely requires a checking account, which may not be possible if you have a negative banking history
  • If you don't have enough money in your account to cover your check, you may be charged nonsufficient fund or overdraft fees
  • Can get lost in the mail
 

Credit card

  • Convenient and saves time
  • Can make one-time payments or set up recurring payments, which reduce the chance of paying a bill late
  • Easy to prove payment if there's a dispute
  • If there isn't enough money in the account when the automatic debit happens, you may have to pay additional fees
  • If you have to replace the card, you'll have to remember to update the information with the billers being aid with automatic debit
 

Money order

  • Easy to understand
  • Can be mailed
  • Can be more secure than a check in some cases, as no personal banking information is on the money order
  • May be inconvenient because you have to buy the money order
  • Cost per money order
  • May be hard to prove payment unless you have the money order receipt and receive the receipt for payment
  • Hard to recover if lost
 

Online or mobile bill payment

  • Convenient and saves time
  • Can be set up with a bank, credit union or prepaid card account, or through the biller's website
  • Can make one-time payments or set up recurring payments, which may reduce the chance of paying a bill late
  • If set up through your bank, credit union or prepaid card account, you may be able to receive warnings or alerts if your account balance goes below a certain amount
  • You can often use a mobile app for bill payment
  • Takes time to set up and learn
  • Possible risks of overdraft and fees or a rejected payment if there isn't enough money in the account when the payment occurs
  • Data may be collected and shared in ways you don’t want
  • Mobile device can be lost or stolen, allowing potential access to your financial information
  • Financial information may be vulnerable to theft if mobile app is used on public Wi-Fi
  • Some checking account and prepaid card providers don't let you set up recurring bill payments through their websites, but you can likely still do so through the biller's website
 

Prepaid card

  • Convenient
  • Can pay bills over the phone, online or through a mobile app
  • Easier to prove payment if there's a dispute
  • Possible fees for using the card to pay a bill, which would be listed in the card agreement

 

Choosing How to Pay Bills Workbook
Download this fillable PDF to help you save money and time.

 

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