Five Reasons to Sign Up for Online Bill Paying

Editor's note: This is the first part of a two-part series on online bill-paying. This article spells out the benefits of online bill paying. The second part, coming tomorrow, will explain how to set up your online bill pay account and make the most of it.

Say it ain't so -- you're still writing checks.

After all this time, only around 28% of Americans pay their monthly bills online, according to a 2007 Pew Research survey.

If you're still putting felt pen to safety paper, you're missing out on an opportunity.

Online bill payment can help you to manage your budget, protect yourself from identity theft, declutter your life and protect the environment.

Here are five reasons you should sign up for online bill pay:

1. It's Free

At most banks, there is no charge for using online bill pay.

2. It's Easy to Use

You can pay anything using online bill pay -- credit cards, mortgage payments, even the babysitter (as long as she accepts checks).

Utilities, mortgage companies and other firms that send you regular bills may offer electronic bills, or e-bills, which are delivered to your online bank account. You can pay those bills online without ever touching a piece of paper.

If a particular company doesn't use e-bills, you can still pay with online bill pay. Once you've set up the payee information -- more on that in Part 2 -- and scheduled a payment, your bank will generate a check from your account and mail it to the payee. You can schedule recurring transactions, like mortgage payments, to go to the same payee for the same amount on the same day each month.

Some banks even let you set up one-time payments up to a year in advance--so you can schedule birthday checks for your entire family in one fell swoop.

Many banks offer email alerts that can notify you when a new bill arrives, remind you that a payment is due or let you know that your payment has been received.

3. It's Secure

Online banking is safer than traditional paper banking. In fact, just 2% of identity thefts occur online -- and 53% of identity thieves know their victims personally, according to a 2007 study by Javelin Strategy and Research.

4. It Makes Record-Keeping Easier

Moving your bills online will drastically cut back on the amount of paper you'll have to file.

Better yet, you'll have easy electronic access to your records -- which is much more convenient than digging through paper files. And those records will include reports that will give you a better handle on your finances. Wachovia(WB Quote - Cramer on WB - Stock Picks), for example, lets you view up to 16 months of account history online. Citibank, a part of Citigroup(C Quote - Cramer on C - Stock Picks), offers a payee spending report that lists the total you paid to individual payees for each of the last two years.

You'll still get your monthly statements, as well. Some banks will mail you the paper statement. Others will give you the option to view it online. If that's the case, follow your bank's instructions to save a copy on your hard drive.

If you use Microsoft (MSFT Quote - Cramer on MSFT - Stock Picks) Money or Quicken to manage your finances, you can link to your online banking account and download your recent transactions directly into your register. Many banks offer this service free to online banking customers.

If you want to access your online bill pay account from within Microsoft Money or Quicken, however, you'll likely pay a monthly fee. Wachovia, for example, charges $5.95 a month ($12.95 for business accounts) for customers who want to do their online banking from their personal-finance software.

5. It Helps the Enviroment

If every U.S. household switched to paperless bill pay, the ensuing reduction in emissions would be equivalent to taking 355,000 cars off the road, according to a recent report by Javelin Strategy and Research.