Thursday, May 17, 2007

Don't bank on it

Something you technophiles really ought to know:

When you pay a bill online, there is a delay. This is true even if you pay online through the creditor's website. It is even more true if you pay through your own bank's website, with rare exceptions.

It works like this:

You go on your bank's website. You tell the bill pay function to pay a bill. You relax. Must be paid, automatically debited from your account, right?


The funds are paid electronically ONLY if your bank has an EFT (Electronic Funds Transfer) agreement with your creditor. This may take up to several days; four to five business days is considered reasonable by many banks (including mine.)

If they don't have an EFT agreement (which is by far the more common arrangement)...

Your bank waits until they have a sufficient number of "electronic" checks to process and batch print. They process the payments and then they PRINT OUT CHECKS AND PUT THEM IN THE SNAIL MAIL.

That's right. Slower than if you had done it yourself with a snail mailed check.

If you pay online on your creditors' sites, leave three business days of elbow room before the due date. If you pay online on a bill-pay service's site (such as your bank's, or worse, a check cashing institution's or something like that), leave at least a week before the due date.

In my own bank's case, the situation is also fraught with computer replications of human error... a nine-digit bank account number needs a 0 in front of it in order to properly fill a (California) 10-digit account blank and be properly accepted by a creditor's EFT. [Grumble.]

I know what you're thinking.

"But Linda, I do this all the time: why haven't I gotten in trouble?"

Because most creditors have grace periods and you are falling into the technically-late-but-not-cancel-me-late zone. However, you may be accruing late fees.

You have been warned.

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