The simple answer is that bankers believe online billpay users remain customers for more years than customers who don’t use online billpay. And an extra year of your business is worth providing you with free online billpay.

Look at the math: Let’s estimate the average cost (to the bank) to offer you billpay at $0.50 per transaction and the average customer sends out 8 bills per month (I know this from banks). That means it costs the bank about $4 per month or $48 per year to offer you free online billpay. So if their assumption that you’ll stick around longer is correct, it’s totally worth offering online billpay for free. Why? The average checking account customer generates about $300 in revenue (fees, $ on your deposits, etc.) per year and new customers are expensive to acquire (~$200 per).

If you don’t want to be tied down to your bank or credit union, don’t use online billpay, set-up automatic payments or have any direct deposits. But if you’re like the rest of us, before you jump at the $100 offer, make sure the bank is convenient and that the checking account you’re opening includes all the features you’ll need.

You can check out FindABetterBank to compare features and fees for banks in your area.

Many banks today advertise ‘bonus options’ for their accounts that are already industry standard. If you’ve been the customer of only one bank for sometime, you may not know that other banks already offer account features that advertise as ‘new and free!’ or ‘coming soon!’ Here’s a list of features that are virtually industry standard. If your bank doesn’t offer these features, or if they advertise them as “NEW FREE” features, you may benefit from checking out a new bank. Chances are if your bank is behind the times with that feature, they’re are a number of other features that a better bank could offer you.

 

“Free Debit Card!”

This was a great discount when debit cards were first issued in the 70’s, but at this point, so many bank customers use ATMs and commit electronic transactions that most banks will lose customers if they don’t offer these. Still, many major banks charge card holders for debit cards. Make sure they’re not slipping in that $1 monthly fee without you knowing!
 

“Free Online Banking…!”

While initial skepticism about the safety of online banking kept many away, online banking now has an unprecedented amount of security. But it isn’t free for banks to offer online banking, so the question is: should it be free? Again, the bank wants to keep your service, and to do so, it must offer great features. Most major banks at this time do offer online banking where you can check your balance, transfer money between account, and export your account data into tools like Quicken or MSMoney. And all of this for FREE.
 

“…And Free Bill Pay!”

While bill pay is more complicated and expensive for banks to offer, there plenty of banks that allow you to schedule bill payments for free online.
 

“Free Introductory Checks!”

That initial offering of free checks is benefitical to you and to the bank because it familiarizes you with and gets you into the habit of using checks (which you’ll later have to buy). You shouldn’t have a problem finding a checking acconut that offers a free introductory box of checks. And many premium accounts come with free checks for the life of the account!
 

“Free Rewards Program!”

Many banks offer rewards programs for items like digital cameras, airline milage, and cash back, but the benefits of the program don’t need to be great. ANY sort of rewards program, (even one where you could earn points only toward porcelain toasters) can be called a rewards program. Make sure you know what you’re getting into with a free rewards program–while they can be good advertisement for the bank, a bad program is easy for a bank to offer.
 

Both Mint and Quicken Online offer mobile alerts, and  for those of us who use text message for daily communication, these alerts make perfect sense. But even if you don’t text message frequently, think of the convenience of finding the following alerts in your pocket:

Daily Balance
While you can receive reports about your balance everyday of the week, I’ve chosen to receive texts just every Friday. This way, I start my weekend knowing exactly how much money I have available to me. Mint does a great job of this—not only do I get a text containing the balance of all my accounts (checking, savings, and credit card), but they also send the alerts right around 6:30pm—the normal time I switch from “work” mode to “weekend” mode. Whether I’m already out with friends or just getting out of my office chair, right then and there I can plan how much money I’ll spend over the weekend. It’s painless, quick, and extremely helpful.

Large Purchases
You can receive alerts when any of your accounts receives a large charge. Because my only large payments are for my student loans, I set my alerts for “any purchase larger than $60.” This helps me two ways. First, if I am charged for more than $60, I probably didn’t make that purchase, so I can quickly call my bank and report an erroneous charge or, worse, someone else using my account (which, fortunately, hasn’t happened). Second, because my student loan payments are higher than $60, I’ll know when the transfer has taken place. As an extra benefit, if I go out and charge more than $60 on any of my cards, I get a nice reminder to keep my plastic in my pocket for the rest of the night.

Bill Alerts
With Mint, you can schedule text alerts for credit card bills, and with Quicken, you can schedule alerts for any bills. These are great help, especially for those of us who are just learning to pay bills regularly. In Mint, you can choose to receive reminders from 1 day to 2 weeks in advance (in Quicken, you set reminders for any number of days before the bill).  I’ve found that I’m quicker to ‘get on the ball’ with my payments if I receive alerts 4 days in advance, but even if you schedule automatic bill payments, these texts are great reminders for when your account balance drops.

These tools offer other text alerts for when you go over your weekly budget, when the balance on any of your accounts drops too low, or if there are an unusually high amount of purchases in any category (ex: you could receive a text if you’ve spent more than $60 eating out in a week). You can even text Quicken to get your balance any time of the day and Mint will send alerts if your financial institution (bank or credit union) charges anything to your account or if the interest rate on your credit card or savings account changes. And, of course, all of these alerts can be scheduled as emails, too.

Whether or not you text regularly, these sorts of alerts can serve as little reminders to stay on top of your finances (they certainly do for me). Ron Shevlin, a senior analyst at a banking research firm says it well:

“Money is really, really important to us, but we really, really don’t like managing it.”

While it did take me about 15 minutes to get my account and text alerts set up in each of these programs, knowing if my card is charged a lot, receiving reminders for paying my bills, and starting my weekend off confident that I won’t overdraft are huge benefits that are entirely worth it. Whether you’re financially sitting pretty or just scraping by, these alerts will keep you in the know about your accounts and minimize the amount of work you need to put into managing your budget. If you sign up for text alerts through these or any other online money management tool and they help you out, let us know!

Here are a couple screenshots:

From Mint:

And from Quicken Online: