The tube is swarming with banks urging you to pay utilities, creditors and retailers through banks’ online bill pay systems. But the allure is less than remarkable  — there are more  lucrative rewards and more numerous perks to using a credit card.

Chelsea Oakes / Flickr source

Banks’ online bill pay is more convenient than writing checks. It’s more friendly to the environment. It consolidates bills at a single bank account.

Yet, like many other American consumers, I don’t really use my bank’s online bill pay feature.

And I believe the biggest reason that online bill pay doesn’t get much attention is: credit cards.

Utilities and telecommunication services usually accept bill payments through a credit card. But if  your credit card bill is paid off every month, it is smarter to use a cash back or rewards credit card to pay any household bills.

Simply set up automatic payments to cut down on the time spent managing the bills — but remember to take a few seconds to review the statements every month.

Additionally, paying with credit cards is often regarded as safer than paying with debit cards and the checking accounts to which they’re linked.

In a recent comScore report, 43% of respondents cited security concerns for not using online bill pay in 2011. Concerns were likely influenced by recent security breaches at Sony, Michaels Stores and Zappos, which made consumers wary about disclosing information to merchants and retailers.

In the unlikely event that a company leaks sensitive customer information, would it be worse for thieves to steal your credit-card number or your bank account number (which can be found at the bottom of checks that are sent via online bill pay)?

If it were me, I’d certainly prefer a slip-up to occur with my credit card, because it is easier to get a new credit-card number than a new bank account number.

And the little things

It’s not just credit cards that pose a hurdle to widespread adoption of online bill pay.

The comScore report found that 25 percent of respondents like to receive monthly reminders in email, another 11 percent said online bill pay was too complicated, while 8 percent felt that setting up accounts was too time-consuming.

Online bill pay may also take longer because the feature will sometimes print checks, which are then sent to payees. When the payment needs to be processed in a hurry, a paper check may not make the due date.

With the rise in financial tech innovations, I won’t be surprised if a middle man comes in to fill the gap by connecting major service providers and banks – making online bill pay easier to understand and use.

And to make the feature even more attractive, banks should reward customers for using online bill pay!

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