A Guide to Paying Your Bills, and Paying Them on Time

If you pay your own bills, it can give you the chance to take charge of your finances — an issue that should be a priority to everyone.

Paying your bills on time can, among other things:

• Improve your VantageScore credit score;
• Keep the interest rate on your debts lower;
• Eliminate late fees;
• Keep your utility services on;
• Help your accounts stay out of collections.

Learning how to pay your bills — and receiving the benefits associated with paying them on time — can become streamlined if you know which way is best for you to pay your bills and tips on how to pay them on time.

Ways to Pay Your Bills

You have several options when it comes to funding bill payments. All provide particular conveniences, but may also come with drawbacks. Understanding these benefits and risks will be a deciding factor as you’re determining the best way to pay bills.

Cash

Paying your bills with cash can mean you’ll pay no fees that are usually associated with a credit or debit card. Direct cash payments also mean there is no chance of you overdrafting on your account.

One downside to paying your bills with cash is that you’ll likely have to pay your bills in person. Additionally, these types of payments may not be accepted by some companies. Traveling with cash comes with the risk of your money getting lost or stolen, and you’ll need to ask for a receipt if you ever need to prove that you’ve made a payment.

Check

If you choose to pay your bills by check, this process is not automated and you’ll have to remember to mail out your check(s) to arrive at the bank or utility company by the due date. You may also have an additional cost for postage. Companies may charge you if you don’t have enough money in your account to cover the check, and your bank will charge you a non-sufficient funds fee.

Despite the potential drawbacks, people may decide to pay their bills by check, as mailing in a check can be more convenient than visiting a company in-person to pay with cash. It is also safer to mail a check than it is cash. Additionally, you may have some protection if a check is lost, stolen, and/or forged. The paper trail of a check is also beneficial if there is a discrepancy with your bank, lender, or utility company.

Automatic/Direct Debit

An increasingly popular payment option is having the bills automatically taken out of a bank account via direct debit. This means that you don’t have to send out checks or visit a company’s local headquarters every month.

You can set up automatic payments to go to each business every month on time. Payments are easy to prove, and you may even pay a lower interest rate for loans with direct debit.

If you don’t have enough money in your bank account to pay a bill, and your account is debited, you may be charged fees from your lender and your bank. Remember to keep an eye on your account statements to keep from overspending, and always have enough money to pay your bills.

Money Order

Paying your bills with a money order has conveniences similar to those of paying by check. However, you will have to buy money orders (and mail them). Unless you ask for a receipt for payment, it will be difficult to prove payment, and money orders are difficult to recover if lost or stolen.

Credit Card

If you set up automatic bill pay, you may choose to have the funds charged to a credit card. It is also possible to pay over the phone. Paying your bills with a credit card can be easy to prove if there is ever a dispute, and can help build credit.

Paying your bills with a credit card means that you’ll have another bill to pay, but if you regularly pay it off on time, it can increase your credit score and improve your credit history. There are many credit cards with various credit limits, interest rates, and rewards. If you choose to pay your bills with a credit card, examine your credit card options to see where you can get the best rates and rewards.

Using Loans to Pay Your Bills

In certain instances, you may need to take out a personal loan from the bank to help pay your bills. Other times, you may just need a quick same-day loan, emergency loan, or just a simple $100 loan. Even with bad credit, you can get a variety of loans to help you pay off your bills — large or small.

When taking out loans, just remember that you’ll need to pay them back on time to avoid late fees, defaulting on your loan, and/or creating more bills for yourself. Paying down your loans on time can even help improve your credit score. Taking a loan out to pay the bills can help you make the payments on time, however you will have the loan payment to budget for in the future.

Preventing Late Payments

It is not enough to simply know which method of paying your bills will be best for you. It’s equally important to know how to pay your bills on time. Otherwise, you may be subject to late charges and damaging your credit score. Consider the following actions to make sure your bills are paid on time, every time.

• Set up autopay: A surefire way to make sure you are paying your bills on time is to have payments automatically taken from your bank account. Through automated payments, you can choose which account you want the funds to be taken out of, and schedule dates to send the money out for recurring bills. Autopay can be set up through your bank, or online via the bill collector’s website. Just remember to keep enough funds for your bills and other monthly expenses in your bank account.
• Consolidate your bills: If you receive several services from the same provider — internet, phone, and cable — you may be able to consolidate these three bills into one. Consolidating your bills lessens the chances of one getting lost or misplaced and missing a payment.
• Schedule a time to pay bills: Especially if you are a procrastinator, having a set day and time to pay your bills can help you stay on top of your payments. Making a habit to carve out a little time during the month to tally up and pay all your bills can minimize the likelihood of missing a payment.
• Allow time for your payment: Especially if you mail in your payments, know your billing cycles and how long it will take the company to receive and process the payment so that it is on time.
• Use your phone, tablet, or computer: You’ll likely use some sort of mobile device for banking and setting up autopay. With these devices, you can conveniently create alerts to help you pay on time, use a calculator to tally up a total of your bills, and pay your bills online.

Paying your bills on time only takes a bit of scheduling. If you know how you are going to pay your bills, you can then get an idea of whether you are going to mail in your payments, visit a business in person, or pay online. It is a small sacrifice to take the time to know how to properly pay your bills, but the benefits of regularly paying on time can set you up for a life of financial stability.

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