I truly wonder if everyone knows they can pay their bills without paying fees. It really bugs me when there are no ways to pay your bill online without a fee. I don’t like that so many people probably pay it, accepting the fee as necessary instead of finding another way. For the sake of this information, I’m assuming you can hold a basic checking account, financially.

What started this post is my sewer bill. Every month, I receive an email from the city government. If I click “pay invoice” in their email, it brings me to a screen that shows there’s a $1.95 fee for paying, even with a checking account and not a credit card. From that screen, I can’t log into my account. However, if I go back to the email, click their “customer portal” link, then I can log in and pay with a linked checking account for $0 in fees. I put effort into figuring out the account set up here. Had I not, I would have thought they required a fee to pay online and set up a bill pay in my bank account. However, I don’t like paying by sending a check, because it sits outstanding for an unknown period of time until it’s cashed and processed; I prefer the option where it is pulled directly from my checking out immediately so I don’t have to keep track of outstanding checks.

With that, I wanted to share some things I’ve experienced and how I make sure it doesn’t cost me anything additional (unless it’s financially beneficial) to pay my bills.

PAYMENT OPTIONS

There are usually several options to pay a bill. These may include electronic payments via your bank account being linked, credit card payments, in person transactions using cash or check, or mailing the payment with a check. Processing payments costs a business money. It can cost them from a third party provider or by having staff to manually process transactions.

Most placed provide an electronic payment option these days, where you can without the use of a credit card. While I’ve seen an uptick in the number of places allowing payment via PayPal, I’m referring to ACH and EFT transactions. The automated clearinghouse (ACH) is a nationwide network that depository institutions send each other batches of electronic credit and debit transfers. The electronic fund transfer (EFT) is used to move money from one account to another electronically. EFT is an umbrella term for all digital transactions, whereas ACH only refers to transactions used through the automated clearinghouse. In many cases, payments made via ACH or EFT don’t have transaction fees, but some do.

An ACH/EFT payment requires you to provide your bank account number and your bank’s routing number. The company you’re paying is able to draw funds out of your account through this system. Having your bank account information tied to a company makes it vulnerable to data leaks and could cause some people concern. There’s also generally less protections for money drawn directly via your bank account than the type of fraud protection you receive through a credit card.

In general, processing a payment via ACH is cheaper than via a credit card. ACH payments have a flat fee per transaction, whereas a credit card company generally charges a percentage of each transaction. For a $100 transaction, it could cost a company $1 to process via ACH, or if could cost $3 to process via credit. That $2 difference can add up quickly to the bottom line.

There are some instances where you’re charged for sending a check. Honestly, this makes sense to me. The company needs to pay someone to physically receive your check, process the payment, and apply it to your account. The service fee for everything being processed electronically is the surprising one to me. Our city government requires you to add $2 to your car registration payment sent via check/mail. You can pay in person for no additional cost (without the $2 fee). When we lived in a small town in central Kentucky, I would just go to city hall, park for free, wait for a few minutes, and pay via check in person. From leaving my house to getting home, the entire transaction took about 15-20 minutes of my time. Now we live in a bigger city. It’s a 25 minutes drive downtown, parking was $1.75, and there was a long line. The ~90 minutes of my time and having to pay to park in a parking garage were not worth the $2 savings, so now I pay via mail with that convenience fee added to my bill.

Our pediatrician doesn’t have an online portal at all. This is surprising to me because 1) it’s 2023, and 2) it’s a gigantic practice. They provide an option to pay using a credit card over the phone or in person, but it comes with a 3.99% processing fee. There are usually credit card processing fees, but what gets me here is that I can’t pay via a draw from my checking account through a portal. I have to send a check or pay in person with cash or check. One time I paid with cash, and they were confused that I wanted a receipt for it. Since physical checks cost me money to have in my possession, I retain these for when I have no other option. I use my checking account bill pay to send a check. Without fail, I need to be in their office between the time they send the statement and they process the check, meaning I’m hounded to pay the balance. No. The check is on the way. They also take at least 4 days from receipt of check to credit my account. OK, I’ve digressed into a rant again.

CHECKS, CHECKING ACCOUNTS, BILL PAY OPTIONS

Most checking accounts at major financial institutions offer a bill pay system. This is a free service as part of your checking account. You set up a “payee.” This is where you enter the company or person’s name, the address a payment will be sent to, and a phone number for the payee in case there’s an issue with the payment. Your bank sends a physical check to the payee on your behalf (which also saves you postage!). When you need to send a payment, you select the date you want the check to arrive. Since a physical check is sent, it sits outstanding until it’s cashed by the payee.

If you have an account number, there’s also an option that may be available for ACH payments. I have a few payees set up where no physical check is mailed, and my bank processes the payment via the ACH, which I like because the payment is immediate for the day I schedule it.

There are two main benefits of this service. First, there’s a financial benefit. The bank sends the check on your behalf, meaning you don’t have to have an envelope and postage to send it, nor do you have to keep physical checks on hand (we opened a checking account a few years ago, and they charged $17 to have checks for the account). Second, it provides a guarantee. If for some reason the check is not received, there are stipulations that may allow your bank to cover any late fees or similar fees incurred due to a lack of timely payment. I had sent a very large check to a company. Weeks later, it hadn’t been cashed. I went to the bank to discuss, and they issued a stop payment and reissued the check. In this case, there weren’t any fees incurred on my account for late payment, and the company was understanding. My bank also noted that based on the amount, it was flagged for review, and during that review, it may not have actually been sent/processed for payment. I appreciated that I had the paper trail through the process to show what I had done, rather than no receipt or proof of attempted payment if I were to put a paper check in the mail.

CREDIT CARD PAYMENTS

Some companies may embed their credit card service fees within their prices. For example, if you buy something at Kohl’s, there isn’t a “credit processing fee” line item on your receipt. Most large companies prefer the guarantee a credit card provides for payment. When a credit card is swiped, the approval (or denial) is immediate. Accepting a check carries a risk. The company has to process the check after the fact, and if there’s insufficient funds to draw on in that account, they incur a fee for that attempt. So they’re charged a fee and don’t get the payment.

I’ve tried to pay a few people via credit card, so I ask what their fee is. Someone offered to accept a credit card if I split the fee with him. Well, I get 2% rewards on my credit card, so any fee less than 2% would still yield me a positive result. That was a special circumstance though where it was a large payment that needed to be made quickly (e.g., not trusting mail/check).

SUMMARY

Be aware of your options. There may only be a “free” option to pay in person for some (few) companies, but do your due diligence to ensure you’re not being overcharged for simply paying your bills.

I’m going to preach over and over again to pay your bills on time, minimizing interest payments on balances, and without processing fees, all the while knowing your checking account balance and outstanding payments.