How to Pay Bills

Every month you have to pay for the apartment, utilities, and other services. You may also have one-time payments, such as a deposit when renting an apartment. Typically, you will be given a choice in how you pay these bills in Woburn, MA. The list below will help you understand the different ways to pay bills and their potential advantages and disadvantages. Knowing how they are done can help you avoid additional fees, including late payment or non-payment penalties.

Check

Definition

Checks are forms you fill out to pay for something from your checking account. The check indicates the amount and the name of the person or the name of the company to whom the payment is intended. This amount will be withdrawn from your checking bank account when that person or company receives the check and puts it in the bank or cashes it out. A similar account can also be opened with a credit union.

Benefits

This option is convenient to use after you apply and open an account with a bank or credit union.

  • The check can be sent by mail;
  • In the event of a dispute, it is easy to prove that the payment was made;
  • The money is held in your checking account until you write a check and it is deposited in the bank;
  • Unlike cash, money in your account is protected in case the check is lost or stolen, or if someone forges your signature. At the same time, it can be difficult to stop the payment of a check if the person receiving it quickly puts it in the bank.

Risks

If you pay bills with checks and don’t have enough funds in the bank, the bank or company you send the check to may charge you a fine.

  • You must remember to pay the bill each time (this is not an automatic payment);
  • Additional costs of mailing the payment.

Postal money order

Definition

A postal money order can be used instead of a check. You can buy a money order to pay a company or someone else.

Benefits

  • Easy to understand;
  • Can be sent by mail;
  • The money order does not include your bank account information.

Risks

  • It is not very convenient because you have to buy the service;
  • There are additional costs associated with purchasing a money order and then posting it;
  • It can be difficult to prove that payment was made if you do not have a money order receipt and payment receipt;
  • In the event of theft or loss, the money will be difficult or impossible to recover;
  • You must remember to pay the bill every time (this is not an automatic payment).

Cash

Definition

Cash is the money you have on hand.

Benefits

  • When paying the full invoice amount in cash directly to the company, there are usually no additional fees charged to the payer. Purchasing or using special products such as postal money order or prepaid cards may incur additional costs;
  • You are not making debts by paying in cash;
  • You do not run the risk of overdraft.

Risks

  • Not all bills can be paid in cash;
  • Traveling to the company and paying bills in cash on the spot can be an inconvenient and costly way to pay bills;
  • Without a receipt for payment, it will be difficult for you to prove that you paid the bill;
  • Cash is difficult or impossible to recover if stolen, damaged or destroyed;
  • You must remember to pay the bill each time (this is not an automatic payment).

Credit card

Definition

A credit card allows you to borrow money within a specified credit limit. If you do not pay the entire balance, you will be charged interest and may also be charged other fees in accordance with the terms of the contract. You should be prepared to make a minimum payment every month. To pay off debt faster, you can pay more than the minimum monthly payment.

Benefits

  • You can use your credit card to pay bills by phone or online;
  • In the event of a dispute, it is easy to prove that the payment was made;
  • You are protected from having to pay all or some of the costs incurred by your credit card if the card or your information is stolen or lost and you report the theft;
  • It can be used to issue automatic payment of current bills;
  • Helps build a credit history if you pay on time and don’t spend your entire credit limit.

Risks

  • Your costs are higher than paying in cash or by check if you don’t pay your entire credit card balance each month. If you have an unpaid balance, you need to pay interest on that balance;
  • This is another bill you need to pay;
  • You are in debt as you borrow money to pay bills and other expenses.

Online payment

Definition

You give your bank information about a company or service provider and the bank pays according to the amount and schedule you specify.

Benefits

  • Convenient and saves time;
  • Allows you to easily pay bills that are issued frequently and on an ongoing basis;
  • You can pay every month or arrange a current (automatic) payment using the online services of your bank or credit union;
  • Reduces the risk of late payment – after making a direct debit, payment is made automatically;
  • In the event of a dispute, it is easy to prove that the payment was made;
  • It is easy to stop an unintentional or erroneous payment.

Risks

  • It takes time for registration and training in use;
  • If you pay bills online without having enough funds in the bank, the bank or service provider may charge you a fine;
  • If you issue automatic payment of current bills and the invoice amount changes, you may pay the wrong amount. If you pay less than what is shown on the invoice, you may be charged a fine.

Automatic or direct debit

Definition

You provide a company or service provider (such as a mobile or utility company) with your checking account information, and they will withdraw money from your account every time you are owed a fee (for example, every month).

Benefits

  • Convenient, free and does not take too much time;
  • You can lower the loan interest rate by agreeing to automatic debiting of payments;
  • Allows you to easily pay bills that are issued frequently and on an ongoing basis;
  • Reduces the risk of late payment – after making a direct debit, payment is made automatically;
  • You have the right to stop automatic payments;
  • In the event of a dispute, it is easy to prove that the payment was made;
  • If the invoice amount changes from month to month, you may be notified before the money is withdrawn from your account.

Risks

If you pay bills with direct debit without having enough funds in the bank, the bank or company you pay may charge you a fine.

Warning: When money is automatically withdrawn from your account, you may accidentally spend more than you have in your account. If you do not have enough funds in your account to make automatic payments and other payments you made, you will be charged heavy fines. To stop automatic payment, you need to contact both the receiving company and your bank.