Do you use your bank or credit union’s “bill pay” function to pay your bills each month?
You may want to consider changing this strategy. Using bill pay, especially when a paper check is involved, exposes your payment to a few different risk factors:
- Potential delayed delivery of your payment.
- Inability to track the status of your payment.
- Checks lost or stolen in the mailing process.
- Payments lost or misapplied by the recipient.
Money expert Clark Howard says that he ditched the convenience of using a bank or credit union’s service to pay all his bills for a more time-consuming method: Paying each vendor directly on their website or online payment portal.
He does this in the name of financial safety and transaction transparency. Read on to understand why.
Clark Cautions Against Using Bank Bill Pay, Advises Direct Payment Instead
During a recent episode of The Clark Howard Podcast, the risks associated with modern-day bill-pay services from your bank or credit union were a topic of discussion.
A listener wrote in to express frustration with an experience with USAA. Clark responded with some practical advice we all could use as we navigate our monthly expenses.
Johnny in Florida Writes:
“What do you know about USAA’s checking account processor change? The new USAA system debits my checking account 1-2 days before the payment is sent. This is not a problem for electronic payments. However, with paper checks using Bill Pay, the payments are deducted from the account when the check is sent. Customer service told me that I will not receive a canceled check image, and I will not get any confirmation that the check was actually cashed. This only becomes a problem when the checks are not cashed. Unfortunately, some of my Payees do not cash checks in a timely manner. Some checks remain uncashed for several months due to a problem with the vendor’s business office. My question to the Customer Service is where does the money go, if it is not in my account? The only status I get in the Bill Pay is ‘Processed.’ Sadly, the days of “floating a check” are gone with USAA.”
Clark Responds:
“Well, it’s actually a lot worse than that, Johnny. Any bill pay service that doesn’t have an electronic link to an organization to pay is printing out a paper check. This is creating hazard for you like you can’t imagine. So, think about this scenario: They deduct money from your account and then somebody steals the check in the mail process. You don’t know that the check’s been diverted, your money’s gone already from your account, and then maybe you had a dunning notice saying you’re past due on whatever you were paying through USAA’s billing service. You’re out the money, and they still want their money. It is a mess. And that’s why I don’t use bill pay service anymore.
“The problem is in how the bill pay system works now with most financial institutions, where the money for any paper check is deducted and then you are in a position where you don’t know what happened. Let me tell you: Ignorance is not bliss in this situation. So, what I have gone to — and I found that it’s worked much better — is that I am paying most of my bills at the site of the vendor. Vendors overwhelmingly now have the ability for you to pay in their payment portal. So, instead of just being able to conveniently go to one bill pay service at my financial institution, I have to go to every single one and pay bills there. It’s much safer and the audit trail of the payment is much clearer.“
How do you pay your bills? Have you had an experience that would add to this discussion? We’d love to hear your thoughts in the Clark.com community.
The post Why Clark Has Ditched Bill Pay and What He’s Doing Instead appeared first on Clark Howard.