Making Cents: Paying online has advantages

Since a few quick clicks of the mouse are a lot easier than sitting down with the checkbook, online banking has become a convenient option. Still, there are pros and cons to paying bills online.

First, on the plus side, is the reduction of paperwork. While you may want to retain some paper records for peace of mind, online payments eliminate the need to save every scrap of paper "just in case." And you can even set up recurring payment withdrawals for set bills, like rent, mortgage or car payments. Likewise, periodic payments can be in place for bills that come in twice or four times a year, such as property tax or homeowner's insurance.

As far as safety is concerned, online security is exactly that - all account information and transactions are encrypted, and as an added layer of protection many sites now automatically sign you out after 10 minutes of inactivity.

Another advantage to managing bills online is immediate access to all account information, whether you're home or on the road. No more waiting to confirm a balance with a bank representative or putting up with those obnoxious voice menus that keep you waiting on the line.

Paying online is also cost-efficient. With stamps costing almost a half-dollar apiece, it doesn't take long to tack an additional five or 10 bucks on to a pile of bills. Then, there's the reduction in envelopes and, of course, checks. And for some, the drudgery of manually writing out checks is reason enough to procrastinate bill paying, perhaps adding late fees to the mix.

The cons:

Chances are good you will experience a computer glitch from time to time, and will be unable to access the Internet. If you have asked your creditors to stop sending paper bills and rely solely on Web site accounts, you may find yourself scrambling to meet payment deadlines.

Monthly fees also may be attached to online bill payment. Granted, they may be small, but they should be factored in when deciding whether to go paperless completely, stick with the checkbook-and-stamp routine or do a combination of both.

Whichever method you go with, just make sure payment deadlines are consistently met. The bottom line to late payments is a poor credit rating.

That's bad news whether you're an online or offline bill payer.

John P. Napolitano is the CEO of U.S. Wealth Management in Braintree. Do you have a financial issue you want him to answer? E-mail him at biznews@ledger.com or call him at 617-786-7073.