Posted by Lending Club :: March 3, 2009 @ 5:38 am

We all know that bills should be paid on time. The consequences of a late payment, particularly for credit cards, can be extremely expensive. The amount of time required to ensure that your payment arrives before its due date depends on the method of payment you choose to use.

Gone are the days when writing a check for your bills was the only method of payment available. Now, you can pay online through a variety of methods, as well as over the phone in many cases.

There are three basic types of bank-initiated online payments and two types of online payments initiated by service providers. All have their advantages and disadvantages and take varying amounts of time to arrive.

Bank-Initiated Payments

These types of online payments are configured through your bank account. After the initial effort to setup the bills to be paid, payments can be made very easily.

Electronic One-Time Payment
This method allows you to pay a specific amount for a specific bill. When it’s time to pay your bill, you login and enter the payment details. The funds are withdrawn from your account and arrive within a few days. You need to remember to schedule this payment each month and ensure you do it early enough that the money will arrive in time.

Electronic Automated Payment
For bills that have the same due date and amount each month, you can have your bank automatically transfer the money in time. It will still take a few days for the money to arrive, but you won’t have to remember to initiate the transfer. You can schedule it with plenty of time to spare to ensure that the money arrives promptly.

Manual Payment
Some banks will write checks and mail payments on your behalf. They typically even cover the postage to mail the payment to your service provider. This method takes the longest because of processing time on your bank’s end as well as delivery time, so be sure to schedule such payments well in advance of your bill’s due date. The advantage of this method is that you can pay for things that don’t offer online bill payment. You can even pay a friend or babysitter online through this method.

Service Provider Payments

The alternative to paying through your bank online is going directly to the service provider’s website. The disadvantage is that you won’t be able to pay all of your bills from a central location and will have to maintain many different accounts. The advantage is that payments process very quickly, often the same day.

Electronic One-Time Payment
Using a one-time payment, you can pay for a specific bill as it becomes due. You may be able to pay with a credit card or checking account and can usually pay as late as the due date without incurring a late payment fee.

Electronic Automated Payment
The other service provider payment type is an automatic payment. The service provider will charge your bank account (credit or checking) the full amount due on or before the due date. This is the most convenient method, but removes the step of checking bills for errors before payment is made. For bills that are always the same amount, this method can work well.

Obviously, you can also pay a bill by check yourself. You’ll need to plan ahead for the time the check will spend in the mail to ensure that it arrives in time to avoid a late fee.

With various levels of interaction and convenience, you have many bill payment options available. Depending on which method you choose, you can pay as late as the due date or may need to plan 10 or more days ahead to ensure that your payment arrives promptly. Doing so will guarantee that late fees are one expense that you’ll never have to experience.

Which bill payment methods do you use? How early do you submit payments?