Online bill pay is a service often provided by banks to let their customers pay their bills to different creditors via the internet, simply by transferring funds. This convenience sometimes costs a small fee, though some banks, as an incentive to bank with them, will offer free online bill pay. To sign up for this service, all that is required is a visit to your bank to fill out some paperwork and set up a user ID and password to access their account.

Before deciding whether or not to use this service, it is important to consider the pros and cons. Once the advantages and disadvantages of it are understood, it's easier to decide if online bill pay is for you.

There are many advantages to online bill pay. One is that it is fast and convenient. The websites are always open so, if you want, you can pay your bills at 2:00 in the morning in your pajamas. Once the payment is transferred, you get confirmation shortly that the payment has been received. There's no wondering when the payment will be received or waiting for the funds to clear.

Another benefit to online bill pay and banking is that it is easier to keep track of what is paid, when it clears, and your balance is updated faster. By being able to constantly check your balances and transactions, the risk of bouncing checks and being charged overdraft fees goes down.

Bank sites will often offer different tools and programs to help organize your accounts and schedule bill payments. Some even let you set up automatic payments for your bills so that you don't even have to think about it - they'll take the money out of your account on a specific day and pay the bill for you. This is great if you tend to be absent-minded or if you are really busy - automatic, online bill pay will do all the work for you.

While online bill pay offers convenience, speed, and the ability to constantly check your accounts, the cons of online banking and bill pay must also be considered. Even if you have already decided to do online bill pay, it is still wise to know of problems that may arise.

One thing that many people worry about when it comes to banking online is if it is secure. With identity theft on the rise, it's a valid concern. Read your bank's security policy and decide if you feel comfortable with their program. Keep in mind that the majority of bank websites are very secure. Don't be fooled by people, however, who pose as representatives from your bank, sending emails that ask for account numbers, social security numbers, or other sensitive information. Your bank already has that information and would not need to ask you for it. If in doubt about anything your bank (or someone else pretending to be your bank) sends, don't hesitate to ask for verification from your bank.

Another drawback to online bill pay is that you may encounter problems with the site itself. If you're not familiar with the Internet or just the site, you may not feel comfortable paying your bills online. Also, there are times when the website may be down - sometimes the bank will shut it down temporarily to do maintenance on the site or there may be something wrong with their server. Either way, if you've waited until the last minute to pay your bills and the site is down, you could be in trouble. The best way to avoid this situation is to try to pay bills a few days before the due date.

Finally, the other drawback to online bill pay is that the convenience of automatic payments may result in you forgetting about it and not having the adequate funds to pay. Once this happens, you could incur some overdraft fees. Be sure to only do automatic bill pay if you know that you will have enough money in your accounts to cover the various transactions.

Online bill pay can be a great tool in managing your money effectively. Not only will you save yourself some extra time and effort, you'll also be making your payments on time and cutting down on the time devoted to doing the bills, so that you do something you actually enjoy.