Sunday, December 19, 2010

Using electronic payment methods is convenient, but are you wasting money? Is it safe?


Today, paying virtually all of our bills electronically has become the norm. However, we've also all heard about identity theft and are aware of the scandalous fees most banks attach to electronic transactions. Here we have a few tips that help assure that those electronic payments get to the right place, securely and without wasting money.

Sometimes you can be charged double fees when you use an ATM to make an electronic payment. For example, if you pay your phone bill by transferring money from your bank account to the phone company, you may incur a fee, both from the bank and the phone company!

Here's another way banks dip into your funds for a few extra bucks per transaction: let's say you stop at an ATM to withdraw cash (an electronic payment to yourself) for gas money or whatever. If that ATM is not owned by your bank, but another bank or vendor, you are typically charged $2-3 by that institution to get your cash out. To add insult to injury, your own bank then tacks on another $1-2 for processing the transaction! So, just one transaction ends up costing you an additional $3-5.

So, after becoming aware of that sort of 'fee structure, you decide, what the heck, I'll just pay at the gas station with my card and avoid those extra fees. Not so fast. In today's confusing world of finance, convenience is not free. You may think that making an electronic payment for your gas is like a POS transaction at the supermarket, which is almost always free. Not true. Most gas stations charge a transaction fee, typically around $0.45-0.50 for using your card, rather than cash. All these 'little' fees do add up, so be sure and check with each vendor before making your purchases.

Remember the days when your own bank didn't charge for using the ATM? Those days are almost behind us. Now, some banks even charge you for using the ATM to check your balance, running you another dollar or more.

The bank is supposed to display a message on the ATM, warning you that this transaction will incur a fee, requiring that you press the 'I agree to this fee' button. However, this is not always the case. I've been charged a fee at the ATM without any notification and it just showed up on the statement!
While having the ability to make electronic payments does save time, over time and with frequent use, those fees do add up. It's smart to read the fine print in your bank agreement to see just what those fees are and to which transactions they apply.

Now for the last word on making electronic payments. If you're paying by phone or online, you should always receive a confirmation number for the transaction. If there's any error in the processing, you can always fall back on that confirmation number. Otherwise, with no confirmation number, you may find yourself with a 'late payment' fee being tacked on to your account.
Follow these tips and you'll save time, money and hassles!

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