I was having coffee with a friend this week and she said, “My adult children make fun of me because I still write checks!!”
So do I, but it turns out that we are in the minority. According to a recent study, nearly 50 percent of those surveyed pay their bills online. The study reveals a “deep generational difference when it comes to bill-paying behaviors.” Not surprisingly, seniors pay more bills via snail-mail, at over 40 percent.
Making payments online is most popular with younger consumers. Older consumers still like the written proof a check provides, and may be convinced that it is a more secure way to pay. Older people have always paid bills by check, mail order or in-person, since those were the only options! Sometimes it’s just a habit.
But it may be that those computers we were scared of 10 years ago make paying our bills a lot easier. In the old days, we’d sit down every month and write a check to pay each bill that passed through our mailbox. Now, we can pay bills without even looking at them, authorizing a bank to draft funds from a checking account or letting companies and credit cards to debit money directly.
It once seemed terrifying; now it’s second nature to some. And there’s no harm in letting a bank handle your bills, right?
Well, maybe. Automated payments and electronic banking make it easier to pay bills, but you still have to track your bills, said Scott Lang, a senior vice president at NACHA, the Electronic Payments Association, which oversees the technology used for automated payments.
As with all innovations that make life more convenient, automated bill payments can have a downside, including poor personal finance habits.
By allowing credit card companies to automatically draft money from your account or allowing vendors to draft from checking accounts, automatic payment ensures you’re never late in paying your bills. But it can also contribute to you not paying attention to your bottom line.
Are you living paycheck to paycheck? Or do you pay your credit cards on time and have money to spare in your checking account? If you’re the sort of diligent person who can use auto pay without worrying about overdraft fees, then take advantage of it. If you tend to overspend, it might be best not to have it all done automatically. Obtain reminders that the bill is due instead and review your bills every month.
If you are comfortable using a computer for other purposes, you will discover that it can be a quick way to follow payments on one screen, without a trail of paper on the kitchen table. If you’re already using your online banking system, you can see every transaction in one place.
With many big banks charging for checks (and the price of stamps), it seems paying online is faster and cheaper. But having to write a check each month might actually help you spend less. There is something to be said for the view that if you use a credit card, you actually spend more than if you pay with cash. The same can be said for auto pay.
And if you plan on changing banks, automatic bill payment can be a hassle. You’ll have to notify every vendor — the utility companies, phone companies, credit cards — of your new account. If you change banks, it can be a nuisance; you have to remember to notify vendors of credit card expiration dates and new cards.
If you are thinking of changing the way you pay your bills, consider the following:
- You should never pay a convenience fee to automate your bills — period.
- Print receipts and keep them in a folder, or if you’re being green, keep a digital folder of receipts on your computer (and back up those files!).
- Always have good strong password protection.
- Keep a paper record of your payments and which companies and utilities you need to update when you get a new credit or debit card.
Sometimes progress is hard to embrace. But right now, with all these options, it pays to do your homework, talk to friends and family and make the right decision for yourself.
And I bet you don’t hear complaints from your family about hand-written checks when they receive one from you as a holiday gift!!!
This article was written by Catherine Blinder, chief education and outreach officer of the Department of Consumer Protection of the State of Connecticut. To learn more about how the Department of Consumer Protection can help, visit us online at www.ct.gov/dcp.