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Canada’s Peter Pig’s Money Counter

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Direct payment can ease the hassle of paying bills

Direct payment can ease the hassle of paying bills

By Carla Hindman, Director of Financial Education, Visa Canada

Paying bills is not a popular pastime. Aside from departing with your money, it can be a tedious routine of travelling to your local financial institution or writing and mailing cheques. I've also experienced a few late fees when payments got stuck at the post office and didn't arrive in time.

Then I discovered automatic bill payments, where your bills are paid automatically through your debit or credit card or through an electronic transfer out of your bank account. Most financial institutions and payment card companies offer automatic bill payment services and more and more merchants accept this convenient – and often free – way to pay bills.

Automatic bill-paying features include:

  • Flexibility. Thousands of national and local merchants accept automatic bill payments through payment cards or chequing-account debits, including phone companies, utilities, cable/satellite TV providers, insurance companies, gyms, and newspapers/magazines. Many lenders allow automatic payment for mortgages and other loans and may even offer some type of discount for setting it up.
  • Increased convenience. Automatic payment saves time, eliminates cheque-writing and mailing hassles and helps the environment by reducing paper use. It also lessens the risk of your cheque being delayed, lost or stolen by mail. Don't be daunted by having to fill out a few forms to sign up for automatic payment. Spending a little extra time this month can save you hours over the next year.
  • Payment options. You can choose one-time bill pay, where you first review your bill and then authorize payment, or automatic bill pay, where your bills are paid automatically at a scheduled time. Both options are typically available from your financial institution or payment card company. Some merchants do charge a small fee for accepting automatic payments, although most don't.
  • Earn rewards. If your credit or debit card offers usage rewards such as airline mileage or cash rebates, your reward points can add up as you pay your monthly bills.
  • Safety. Automatic payment transactions using payment cards can be protected against card fraud, theft or unauthorized card purchases (details are available through payment card issuers). Always monitor your monthly statement to identify unauthorized transactions.

To enroll, contact the companies that regularly bill you for services to learn about their automatic payment options, or contact your financial institution to see what bill payment services they offer.

Some final thoughts to help you be a savvy consumer when it comes to using a bill-paying service:

  • Ask if there are any fees involved.
  • Before signing the automatic bill payment agreement, make sure you understand and accept the terms.
  • To stop service, you must notify the merchant as well as the financial institution/payment card issuer. Cancellation may take a month or two to become effective, so plan ahead.
  • If your credit or debit card expires or is replaced, the merchant may need the new card information to ensure uninterrupted service.
  • Track expenses carefully and keep your budget up to date.

If you find solace in sitting down at the kitchen table to pay your bills, then automatic bill payment isn't for you. Personally, I'd rather spend that time doing something I enjoy.

This article is intended to provide general information and should not be considered legal, tax or financial advice. It's always a good idea to consult a tax or financial advisor for specific information on how certain laws apply to your situation and about your individual financial situation.

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