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Managing Debt with Online Bill Pay

Since most of us are indebted to one creditor or another, we know that it can sometimes be difficult to manage debt effectively and keep our financial matters in order. With all the paper clutter that daily life produces, it is no wonder we have a hard time staying organized and exercising good debt management skills. It is so easy to get bogged down with endless bills and mounds of paper, and not managing your debt properly can lead to other money problems down the line - missing a payment here or a bill there does not cast a favorable impression on creditors. As credit counseling services advise, the first rule of thumb for maintaining a successful financial situation is to GET ORGANIZED.

What is Online Bill Pay and How Does it Work?

Online bill pay is becoming increasingly popular with individuals who want to exercise good debt management skills, and save time and money in the process. So, what is it exactly? Basically, online bill pay is a method of payment which allows an individual to issue payment instructions to a creditor electronically via a computer program. Online bill pay can virtually eliminate errors, making the management of your debt that much easier. And it is a much faster payment method than mailing checks.

There are two basic categories of online bill payment methods - those that are offered through a banking institution, and those that are offered through a service provider, such as a phone credit card company. Personal finance software programs such as Quicken^TM or Microsoft Money^TM have been created to assist consumers manage their debt.

Online bill pay is generally designed to be quick and easy to use. Most major banking institutions and businesses now offer this service free of charge. You can either choose to manually enter your payments each month, or set up for automatic withdrawal from your account. With automatic withdrawal, you can set up your payments in advance of their due date, and won't have to worry about giving manual instruction to make your payment each month. The creditor will transfer funds directly from your bank and apply those funds to your account without any action required on your part.

If you are currently enrolled in a debt management program through a credit counseling agency, it is all the more important that you make your creditor payments on time. If you don't, you risk the chance of being dropped from the debt management program. Fortunately, most consumer credit counseling agencies offer a method of automatic bill paying called ACH (Automatic Clearing House), which ensures that your monthly debt management payments will be made on time on a monthly basis to all of your creditors. Learn more about the benefits of ACH from a certified credit counseling agency such as ClearPoint Financial Solutions that offers ACH as a quick and error-free monthly payment method.

Benefits of Using Online Bill Pay

EASY

You can save time by using the online bill pay feature. Rather than writing out checks, licking stamps, and filing piles of papers, you can set up an online account that will eliminate all of those steps. Management of your debt will become so much easier - and faster.

If you ever need to review past bills, you won't have to spend time searching for them since all of your account information is in one centralized location.

COST-SAVING

Save on the cost of postage stamps - they can really add up! Since the average household receives 15 bills per month, that's about $70 a year in postage costs alone.

Avoid late charges that can be incurred when a payment is received after its due date. Missed payments could result in any of the following:

• Higher interest rates
• Late fees and over limit fees
• If the payment is already past due, your account may go to a collection status

CONVENIENT

Want a more convenient debt management solution? Create an automatic online bill pay account that will allow you to set up recurring payments to be withdrawn from your account on a regular basis. You can reduce the chance of late or lost payments, and save time in the process.

If you find that one of your bills is due the next day, online bill pay is the best way to ensure that your payment will be posted on-time.

What should consumers look out for?

There is always an element of risk involved when any transaction is conducted electronically. Although minimal, this risk is steadily increasing due to more sophisticated hacking techniques being developed.

A technique known as "phishing" has become a major issue over the past few years. Phishers send out fraudulent messages (either in the form of an e-mail or a web page pop-up) that are designed to trick you into sharing your personal account information. These messages often appear to be legitimate, (complete with company logos) and can deceive a consumer if they are not careful. In a recent study conducted by the Gartner Group, it was determined that 57 million Americans have received phishing e-mails and, of that number, nearly 2 million been deceived into willingly providing personal account information to a bogus source.

How to Protect Yourself From Scams

Follow the tips below to help protect yourself from online scams:

• Regularly review your online banking transactions to ensure that no suspicious activity is occurring.
• Change your online passwords every 30 to 60 days. Make sure the password contains a combination of upper and lower case letters as well as symbols so as to minimize the chance that it could be guessed.
• Look out for fraudulent e-mails - Although an e-mail may appear legitimate (complete with logo) it may be coming from a fraudulent source. If the e-mail requires that you update or verify your personal account information urgently, DO NOT respond to the request.
• If you receive an e-mail from an unknown sender, delete it. If you do open the e-mail, make sure that you do not click on any links. You could be downloading a virus to your computer. If you think the e-mail could be legitimate, it is better to type the web address into your browser rather than clicking on the link.
• Maintain the anti-virus and anti-spam software on your computer. This will help to block out unwanted spam and junk mail.

Seek out Good Advice

With so much information about credit out there, it is often difficult how to decipher the good advice from the bad. For professional guidance on online bill pay or general debt management issues, contact a certified credit counseling organization such as ClearPoint Financial Solutions for a personalized consultation.

If debt management is proving to be a difficult task and causing you stress, consider a credit counseling session with a CCCS credit counselor to learn better ways to regain control of your financial matters. For more tips on effective debt management, contact us.