All kinds of companies are jumping on the paperless-billing bandwagon these days. Credit card issuers and financial services firms urge customers to receive their statements via e-mail instead of snail mail, as do phone, cable and insurance companies.
Businesses want you to switch because the savings for them would be huge. According to market research firm TowerGroup, the four big credit card networks — Visa, MasterCard, American Express and Discover — have a combined total of 575 million accounts. If they could convince half of those customers to receive statements electronically, the industry could save roughly $275 million annually.
Some companies may offer an incentive for switching from paper; others may simply charge a fee if you want to keep getting your information the old-fashioned way. Whether you've already made the switch or are just thinking about it, there are a few things to keep in mind to make the process hassle-free.
There are clear benefits to going paperless: It's much lower-impact from an environmental standpoint and it dramatically cuts down on clutter in your home office or bill-paying area. But there is also some due diligence you need to practice to avoid problems that can cost you time and money.
Printing at home
Your bank or brokerage may assure you that you'll have access to five or seven years' worth of back statements through their website if you go paperless. While that sounds great, says Gail Hillebrand, senior attorney at nonprofit Consumers Union, it doesn’t get you off the hook for keeping your own copies. The company could change its policy and reduce the number of back statements available at no charge; if you miss that notification, you could be stuck paying a few bucks per statement to access them. What's more, while the nation's biggest banks tend to have the most generous policies when it comes to making back statements available, other companies can have much shorter windows.
Unfortunately, the environmental cost of going paperless often is diminished because people end up printing out the electronic statements from their home computers, which shifts the cost of paper and ink from companies onto customers, says Linda Sherry, director of national priorities for watchdog group Consumer Action. (It's not a total wash, since the environmental cost of physically shipping the envelope is eliminated.) You may, however, be able to print out just the first couple of pages of each bill, since many have several pages of boilerplate disclosures you don't need.
For many people still getting their feet wet with online finances, signing up for paperless billing and printing the statements can be a good first step.
Create a virtual file cabinet
If you're printing online bills at home, continue to file them as usual. For the next step — going paperless — you'll need to create a digital "file cabinet" for your statements. Experts recommend using an external hard drive rather than your computer's hard drive, since your financial information could be exposed when you get rid of the machine or take it in for servicing. Don't — under any circumstances — load the information onto a thumb drive, warns Hillebrand; they're at greater risk of being misplaced.
The simplest way to set up a virtual filing system is to create a master "my finances" folder, and then create subfolders for each vendor with which you have paper-free billing. From there, create another set of subfolders by date if the vendor is one from which you receive monthly (as opposed to quarterly) statements.
Generally, companies set up to facilitate paperless billing will let you save the statement as a PDF, usually located next to the print option. If you're new to downloading, find out where your computer's download folder is located, so you can find the statements easily and save them. Delete them from your download folder after they're safely in your external hard drive.
Centralize your billing
Since checking the mail is a visual trigger many of us rely on to remember to make online payments, Consumer Action's Sherry suggests creating a spreadsheet or other document you can print up on a monthly basis that includes due dates for any bills you receive electronically. Post it in a conspicuous place at least for the first few months, before you get into the habit of checking your e-mail for billing reminders.
If you plan to pay bills as well as receive your statements electronically, professional organizer Julie Morgenstern of Julie Morgenstern Enterprises suggests initiating those bills from your bank rather than from individual vendors. "You can see it, you can control it and you don't get caught by surprise," she says. Instead, if you have half a dozen different vendors taking money out of your account, you could lose track and wind up overdrawing your account.
Keep checking your e-mail
Chances are, if you sign up for paperless billing, that company may switch its communications with you completely to an electronic format. In other words, letters you might have received about rate increases, changes in terms or due dates will now come as e-mail. Just as it makes good financial sense to read everything that your bank, insurance company and so on send you, it's important to read the e-mail that they send.
"Make sure those bills don't go into a spam filter," says Sherry. To avoid this, look for the address the company will advise you to enter into your e-mail address book and add it as a contact. Consider setting up a designated e-mail to funnel all of your transactions, rather than using your generic home e-mail account, to keep important notifications from getting lost in the shuffle.
Don't take shortcuts
While paperless billing can definitely help you go green and cut back on clutter, it's not a substitute for spending time on your finances. "I do worry unauthorized charges are less likely to be spotted by people making the transition from paper to Internet," Consumer Union's Hillebrand says. Here's why your bank account could be at risk: When an online fraudster gets an account number, they'll generally check to see if the number is still good by running a tiny transaction — often less than a dollar. It's the type of thing you might not catch if you just look at the total dollar amount you have in your account. But according to federal regulations, if an unauthorized charge isn't reported within 60 days, you're liable for subsequent charges.
Some providers offer one-click paying right from your email; Hillebrand discourages the use of this. If there's a mistake on your bill, you'll be forced to sort it out after the fact. Click through to verify the details first, she says.
Whether online or off, Morgenstern recommends spending a minimum of 90 minutes a week on your personal finances. Others agree. "The most important thing is if you agree to electronic statements, you still have to read your statements," says Hillebrand. "You're not going to save time."