Thursday, May 15, 2008

Bank Accounts

In my last post, I alluded to the fact that one big factor in making my payments was my bank account.  Because I have a steady job, salaried, my income is dependable.  One thing that I have had trouble with in the past was getting payment to the credit card companies in time.  One time, I went from a 3.9% to somewhere in the range of 30% because I was late in paying one of the cards.  My minimum payment barely covered the interest (at the time, I think the card had a balance over $12,000)!   I called the card company (American Express - Blue) and apologized for the oversight.  They graciously credited back my account, and dropped the interest rate back to the original, but warned me that the next time, they would not be so flexible.

It was then that I began the search for better reminders, or, ideally, an automatic online bill pay service.  There were several out there, but most weren't affiliated with a bank, and I really didn't want a third-party system.

I found an online-only bank that offered the service, but they sold to ING Direct, and ING Direct doesn't offer the same account type.  But I was already hooked, knowing the technology and system existed, so I began my search for another bank that offered the same.  After a few days of searching, I wandered onto Bank of America's website.

They offer free checking, just like most everybody else, but here's the difference:  They also offer E-bills.  E-bills is the term for "electronic billing".  Basically, when you get a bill from just about anybody, instead of (or possibly in addition to) getting a paper statement in the mail, the billing goes to your bank.  And you can set rules for the bill once it arrives.  It is the neatest invention since the Internet - absolutely amazing.  So, now, instead of mailing a bill to the company, my online bill pay receives the bill, and automatically pays it as soon as it gets it.  Because I am depositing money for the next month's bill, there's always enough money to cover in the account.  The process is similar to setting up rules for your inbox, except you are doing it financially.  Of course, I always get a notice e-mailed to me letting me know exactly how much I owe, so I can confirm on my own that the payment will clear.

This allows me to make the minimum payments on my credit cards every month, and at least get those, and most of the rest of my monthly bills, all paid before or when they are due, and I don't miss a payment.  This feature becomes incredibly important in light of some credit card companies' terms of service, which allow them to increase the interest rate on their card if you are late on a payment to anybody.

If you have a bank that offers the E-bill technology, I'd be interested in hearing about it.  Wells Fargo, with whom I've had an account for over 10 years, has it, but charges for the service.  Washington Mutual doesn't have it.  Chase doesn't have it, even though the Chase credit card will issue an e-bill.  (Ironic, no?)

Next up:  The Envelope System goes Digital!

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