Financial Literacy: Paying Bills


Wouldn’t it be great if we didn’t have to pay any bills?  We’d have so much more money we would have to spend on fun stuff.  Well…. if everybody stopped paying their bills, there would be no electricity, gas, phone, internet, clothing, food at our fingertips – basically, none of the services that make our lives so much easier.  We’d be back to raising our own crops, sewing our own clothes, and reading by the light of candles.  That’s because the people and companies that provide things and services need to be paid in order to survive and be successful.  If no one paid their bills, all these stores would close.

So the answer to the question I posed – “Wouldn’t it be great if we didn’t have to pay bills?” is a big, loud NO.  Every bill we get for something we’ve used, is a bill that we should pay – and pay ON TIME.

Paying bills by the due date (usually prominently printed on every bill) is important because
  • It may affect your credit score. If you are a habitually late payer, the store or person you are renting your apartment from, will likely report it to one of the credit bureaus, which will lower your credit scores. Lower credit scores results in higher interest rates on any loans or credit cards you have now and will have in the future.
  • Depending on how low your credit score is, it may even mean you will be outright rejected and not able to get another loan or apartment.
  • You will avoid paying late fees, which can add up over time. Let’s say you’re late 6 months out of the year and the late fee is $35. That totals $210 which is a lot for most of us.
Missing a Payment

It’s easy to miss a payment, since bills come in on different times of the month. Here are a few hints to make certain your bills are paid on time – let’s avoid those late fees:

All banks I know of offer online banking with a bill pay feature. If you pay utilities, credit card bills, insurance bills, etc. on a regular basis, adding them to the online “bill pay” section is worth your time. Even better, if the bill is the same amount every month, like your Internet or car payment, set up an “auto pay” which means the bill will be paid automatically on the same day of each month until you change it.

  • Using this feature also gives you a way to track your payments if there’s ever a question of whether you paid it.
  • But – Bill Pay is not instantaneous. It often takes a few days for your bank to get the information and money to the payee’s bank. When you confirm the payment, your bank will usually give you an estimated day of when the payment will arrive.

Choose one or two days a month (the same days each month, so that it becomes routine) to pay bills. Always put them up in the same place so they’re all there on “bill paying day.” Throwing them on the kitchen counter or in your purse or in a drawer with other stuff is a sure way to “miss” paying on bill. I can tell you that from my own personal experience.

  • If you mail payments, make certain you put stamps on the envelopes. It’s irritating to receive a call saying your payment wasn’t received when you KNOW you sent it in ….. and later you get the envelope back because you forgot to put a stamp on it.
  • Also give yourself a few days for mail delivery. If the due date is the 10th, don’t put it in the mail on the 9th. To insure the payee receives it on time, I’d suggest mailing it at least five days before it’s due.

Organize your bills according to the payment due date. As soon as you receive a bill, circle or highlight the due date to make it easier to organize. This is especially important if your cash balance is low, but you’re expected a deposit in the future. Pay the ones that have the closest due date first.

If you know your payment won’t make it on time, call the payee and arrange to make the payment over the phone on that day. There’s usually a fee for the phone service, but it’s a lot less than a Late Payment fee and won’t affect your credit score.

More Options

So far we’ve only covered paying your bills online through your bank or credit union, and paying by mail.  Not too long ago, these were the only choices, but that has changed dramatically since the introduction of APPS to pay for things, services, and monthly bills.   Many banks, like Chase, now offer a mobile app, as seen in this video.

But there are many other companies, that aren’t technically financial institutions, that now offer apps to buy stuff and services, in addition to paying bills, and the list is growing.

Why? Because it generates income for them. The latest figures show the income generated by the Bill Pay Apps of the leading companies has grown so quickly, the companies are each expected to make billions of dollars for their Bill Pay products by 2023. So the better their product, the more customers they have, the more money they make — which is why they spend so much on research and development.

Depending on which site you go to, the ratings are different as to which is the most user friendly, so I’ll stick with some of the most popular:

  • Google Pay
  • Apple Pay
  • PayPal, Venmo
  • Zelle
  • Cash App

Some payment apps, like Google Pay and Apple Pay, are default choices depending on which phone you have, but they are very similar in the features they offer, and mostly work the same way. You download the free app, upload your credit or debit cards or bank account information and “tap to pay” with your phone at any retailer that accepts the service.

PayPal works the same way with a card reader or online if the merchants have signed up to accept PayPal payments. Currently, it isn’t as widely accepted in brick-and mortar stores.

Google pay offers you the opportunity to have a virtual card as added security.

Because the options for paying bills are growing, Vendors will be more likely to offer rewards to entice new customers and hold on to the ones they have. So talking to others about what methods they use to pay their bills, and why they made those choices, is a good thing. Gaining knowledge so that you can make the best choice for yourself is always a good thing.

We’ll quickly show you videos for the two biggest companies offering bill pay options:

Whichever method of payment you use, the most important thing to keep in mind is that a little organization and planning, will go a long way to paying bills on time – reducing your stress and increasing your credit score.