From the 32nd Floor: Online bill paying saves money

It's my favorite time of the month. My mailbox is filled with bills. Do you hear my sarcasm? Telephone, electric, water, rent, gas and credit cards. Yes credit cards, the scariest bills of all.

I have a few credit cards. I should say here that I use them wisely. I'm the kind of person who doesn't carry cash, ever. I usually have to run to the ATM to get enough money to do my laundry. Money burns a hole in my pocket; I spend it on little things. Coffee shop visits add up at $3 a pop. That's the beauty of a credit card. It actually saves me money.

I'll spare you the lecture about paying off credit cards balances at the end of the month, but I'll share a little secret on how to save a few bucks each month. Pay bills online.

I blame the latest postage hike on online bill pay. It's so easy. I go to my credit card's web site, click the account tab, and enter the amount I want to pay. Who uses postage anymore anyway?

Online banking isn't just a convenience for customers, although that's a bonus. Online bill paying is often less expensive for the companies.

Check processing is costly, so many companies have opted to drive traffic to web sites. If I write a check to the ABC Company at the beginning of the month, it will take two days to arrive at the company's collection center. After the center processes the check, the company has to present the check to its bank. The bank processes the check, and passes it along to the federal reserve. The federal reserve then transfers the money from my bank to ABC's bank.

Paying by check can be a lengthy process. Because the company has to pay for the process, many hire a processing company to collect the checks.

Online bill pay eliminates a step in check clearing. The online process is an automated clearinghouse. The payment goes straight to the federal reserve, and the money is placed from my account to ABC's account. The company eliminates waiting time, and it saves the money of paying a processing company.

When online bill pay first became available, many banks tried to charge for this service. Every time I paid my Discover Card bill on the web site, the bank would charge me $2. The math-whiz I am noticed the convenience wasn't worth the cost. The charge-the-customer-who-is-saving-us-money plan didn't last very long in the saturated and competitive banking industry.

Now, most credit card companies, banks and stores that have credit departments offer online bill pay. Utility companies and other more local companies find the costs of securing a web site, paying for new equipment and electronic processing fees too large to beat a shrinking return on investment. I'm sure the few who don't offer electronic banking services soon will.