The Student's Guide to Bill Payment

Have a bill payment system, avoid late fees.
If you're away from home for the first time, you've just been handed a long list of big responsibilities - and paying the bills is likely to be on that list.

This may seem like common sense, but it's important to pay your bills on time. Nearly every one has forgotten to pay a bill at one time or another, me included, until we figured out a system to help prevent those innocent but costly oversights.

Creditors typically charge anywhere from $29 to $59 or more for a payment that's even one day late. Service providers, such as your electric company or your mobile phone service are less outrageous in their late fees, but still tend to charge about $5 to $10 for late payments. Your money is much better spent on other things, and any late fee is too much to spend on forgetting.

And extremely late payments put you at risk of disconnected service requiring a reconnect fee, a freeze on your credit line, or your credit card's reasonable annual percentage rate (APR) being bumped up to a punishing default APR.

All this can be avoided by taking the time to organize your monthly bill-paying. It'll take a few minutes to about an hour to organize your payment schedule, depending on how many bills you have to pay each month.

Taking the time to do it now will save you time and effort in the future, and gives you more time for the important things, like parties, dates, hanging out with friends, and uh... studying.
To organize a bill payment schedule, collect all your billing statements and put them into groups by due date. Then figure out which ones will be paid with each paycheck.

Most creditors and service providers give you anywhere from two weeks to nearly thirty days from the time they send the statement to the time the payment is due, so you probably have a little leeway on whether you should pay some of them this payday or next.

Once you figure out which bills to pay and when to pay them, you can set up your payments.

Pay by mail?
Does anybody even pay bills by mail anymore? It's such a hassle - you need stamps, envelopes, checks, and a trip to the mailbox. Paying by check through the mail wastes trees and uses fuel. Then you have to mail it at least a week ahead of the due date just to make sure the payment makes it on time. And, you have to manually balance your checkbook.

But if you must pay by check, you can save time by writing out all the checks at once. Write the due date and the payment amount on the envelope where the stamp goes, fill out your payment statement, and seal your statement and check in the envelope.

Keep all the envelopes together, but arrange them in order of the due date. Each week, check which bills must be sent out for on-time payment, balance your checkbook according to which bills will be mailed, affix the stamps, and send them away.

Pay online!
Paying bills online is a much better way to pay. You'll save on stamps, checks, and don't even have to get dressed to go outside to send your payment. Payments are usually received much quicker. And paying your bills online allows you to put your payment schedule on auto-drive if you choose to, saving precious time every single month.

You have two choices in making online payments -

The better way to routinely pay your bills is directly through your financial institution's online bill-pay. Most banks give free online bill-pay with student checking accounts, and it's a great thing to take advantage of. All your scheduled payments will be listed for the month, and can simplify your budgeting. Just be sure to schedule your payment dates early enough to ensure on-time payment.

• You can choose to set up a recurring payment or a single payment for each of your bills.
• Single payments are good for occasional or non-monthly payments, like your tuition bill.
• Recurring payments are perfect for those bills that don't change, such as rent, your car payment, or your mobile phone service.
• So you never miss a due date, set up recurring payments even for bills that do fluctuate, like your credit card or utilities, and then change the payment amount when the statement comes in.
• Payees that accept online payments usually receive payment within about three days. Check your financial institution's policy.
• Payees that don't accept online payments will be mailed a check by the financial institution - but at least you didn't have to buy the stamp. Usually takes about a week, check your financial institution's policy.
• Make sure you have the funds in your checking account before the payment's scheduled pay date.

Or, to send nearly last-minute payments, go through your creditor or service provider's website. Major credit card issuers and larger service providers often allow you to do this, but smaller companies may not. To pay this way you'll have to set up your account in advance and give the company your banking information.

• Log into your customer account and follow their directions on enrolling in online bill-pay.
• They will ask you to give them information from one of your checks to get the account number and bank routing number.
• They may require a waiting period to verify your account information.
• Once verified, payments that are made this way are often credited to your account within one business day.
• Some service providers may charge a fee for paying this way, so check before you do it.
• This can come in handy if you receive income "just in time" for the due date.

What about automatic payments with your creditor or service provider?
How it works - You give them your bank account information and they'll take the payment each month from your checking account when it's due. You'll never have to worry about sending a late payment, and you won't have to change a fluctuating payment amount with your financial institution's bill-pay.

The main drawback to paying this way is that it won't be listed in your scheduled online payments with your financial institution, and may be forgotten about. If you forget about the automatic payment one month and don't have the funds in your account, you could get hit with costly overdraft charges. It may be better to have all your bills paid the same way so you can see them all at once - through your financial institution's online bill-pay.

If you choose to go this route, be cautious about who you give your bank account information to; unscrupulous "businesses" may continue to withdraw payment after the debt is paid or after services are discontinued.

Do you really like the idea of a company having direct access to your bank account without your personal okay each time? It may be safer to just pay them some other way if you aren't sure of the company.

I have one bill that I pay this way - my health insurance required it for new clients. I don't have trouble remembering it since it's the only one, but it could get complicated if I had to remember and keep track of several automatic payments.

Bill payment is simple once you've got your routine down.
With everything else going on in your life, it's great when you can make things easy on yourself. Spend as little time as possible on bill-paying, while making sure that they're all paid on time.