Most banks offer online bill pay services. For those of you who are not familiar with this concept, here is a breakdown as well as pros and cons as to whether or not that service is a good option for you. First, after logging onto your banking website, you would typically enter the information for the payee such as name, address, contact telephone number, and account number. Next, you would click the area that reflects something to the effect of “pay bills.” Select which payee, enter the amount you would like to disburse, verify the details, then you are typically finished.
Here is where it starts to get a little tricky. When you initiate online bill pay, the bank deducts the funds from your account and deposits it into the bank’s house account. The bank then issues a check drawn from its house account. Prior to mailing the check to your payee, they upload a snapshot of the live check to your account, if you have that feature enabled. If the check has not been cashed within 90 days, the bank will typically issue a stop payment, at no charge to you, then deposits the amount back into your account.
If your payee claims to not have received the check, but the funds have not been returned to you, you have no way to prove the check was sent, received, or cashed. The bank will absolutely refuse to issue a copy of the cancelled check to you. The cancelled check is the only proof one would have in a court of law that would evidence the check had been received and cashed. This author would recommend you not use online bill pay, simply for this reason alone.
If you are still considering using online bill pay for its convenience, here is a scenario to ponder:
You submit your mortgage or home owners association (“HOA”) payments through your bank’s online bill pay. Months pass, and you do not see the money returned to your account. The bank or the HOA can cash the check and, basically, spend it as they see fit, including, but not limited to, misusing your funds, applying it to an incorrect account, etc. They then seek to foreclose your home based on non-payments. Your only recourse is to provide copies of the cancelled checks to evidence your funds have been sent, received, and accepted. In this case, the bank is not your friend. They will refuse to give you copies of the cancelled checks. Your home gets foreclosed. Your credit gets affected. You are “SOL.”
Bottom line, do not use online bill pay! This is especially true if you have accounts with Chase Bank, Fairwinds Credit Union, Regions Bank, Bank of America, and Wells Fargo.