9 Surprising Perks (and Some Drawbacks) of Paperless Billing

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Back in 2001, paperless billing was still in its infancy, and I was a recent college graduate who was just getting started in the adult world. At the time, my car insurance provider offered me a discount if I signed up for online billing. The discount helped me overcome my reluctance to give up my paper statements and beloved check writing routine.

The world of paperless billing has evolved a great deal since the first year of the new Millennium. Here are the pros and cons of using paperless billing today, and some suggestions for making sure the benefits always outweigh the costs.

1. Pro: Paperless Billing Is Better for the Environment

Switching from paper to online statements doesn't just save stamps, it's also an important way to help the environment. According to PayItGreen studies from 2010, if just 20% of American households switched from all-paper to all-digital billing, statements, and payments, the collective impact would be enormous. Such changes would include:

• Save 150,939,615 pounds of paper
• Save 1,811,275 trees
• Avoid producing almost two million tons of greenhouse gases
• Avoid creating more than a billion gallons of wastewater in the paper production process
• Avoid using over 100 million gallons of gas to mail payments

2. Pro: Companies Will Offer Incentives to Go Paperless

Since companies spend less on paper, stamps, and sorting when they do all billing and payment online, it can make a big difference in their bottom line to get as many customers on paperless billing as possible. They often will sweeten the suggestion to go paperless by offering customers some sort of incentive to switch over. In some cases, like my auto insurer back in 2001, you can expect a small discount. Other incentives might include a statement credit, a gift card, or even the opportunity to win a prize.

3. Pro: Paperless Billing Helps You Declutter

Paper clutter often seems to have a life of its own. Switching to paperless billing means you'll never misplace a bill in a pile of junk mail, nor will you ever accidentally shred or recycle an unpaid bill because it decided to hide in the pile of credit card solicitations on your desk.

4. Pro: You'll Be Better Protected From Identity Theft

It may offer the illusion of security to hold a paper bill in your hand, but that's not always the case. It's a piece of cake for mail thieves and dumpster divers to glean sensitive account information off a stolen bill they pinched from your mailbox or garbage. By the time you realize your identity has been compromised, you may have a real headache to deal with, and some financial damage to undo.

Your emailed paperless statements will never show your full credit card or bank account information. Even if a scammer hacks their way into your inbox, they'd still have to hack their way into your bill provider's online account to access sensitive information. Prevent this by using a strong password that includes multiple characters as well as upper and lowercase letters.

5. Pro: Access Your Statements From Anywhere

If you receive a paperless bill, it doesn't matter where you are — if you have access to the Internet, you have access to your statement. If you're out of town for work or vacation, you won't have to worry about what vulnerable information is left sitting in the mailbox while you're away.

6. Con: Forgetting to Pay a Paperless Bill

When you ignore your snail mail, it tends to pile up, making it harder to forget that there may be something important in there. Email, on the other hand, is eminently easy to ignore — so your paperless utility bill can very easily go unnoticed.

Similarly, even if you do stay on top of both your paper mail and email, you may not be ready to pay your bill the moment it arrives. If that's the case with a paper statement, you can always set the bill somewhere that you'll see it, to remind yourself to pay it at another time. It is much more difficult to flag your email to remind you to pay the bill, which means you may forget until after you've missed the due date.

The Fix: A Dedicated Email Account and Calendar Reminders

Create a dedicated email account just for all of your bills, and plan on checking this email regularly. In addition, create reminders in your calendar to prompt you to check your dedicated email account so you never miss a payment.

7. Con: Lost Passwords

Passwords are an important part of online security, but the fact that pretty much everything you do online must be password-protected means that the odds are stacked against you for remembering all of your passwords. Many people get around that problem by using the same password for everything — which can seriously compromise your security if any of the accounts you use gets hacked.

Companies that offer paperless billing often require even more security from your password, such as needing a special character, a number, and a capital letter. This is understandable, but it makes it even more difficult for the average person to remember their password — and multiple incorrect guesses can sometimes get you locked out of the site.

The Fix: Create a Password Based on a Sentence

The secret to secure but memorable passwords is to start with a sentence that means something to you. For instance: "I am waiting for the reincarnation of Elvis."

Then substitute letters, numbers, and symbols for each of the words: I@w4troE

With that as your base password, you could tailor it to each site so that you can still remember your passwords, but each site's password is slightly different. For instance, you might add letters and numbers that represent the site to the end of your base password.

For Capital One 360, your password would become: I@w4troECO360

Just jot down the original sentence somewhere you can find it. It will remind you of your password, and mean nothing to anyone else.

8. Con: Forgetting to Update Account Information

If you moved, you'd have to let your bill providers know and inform them of your new home address. Well, the same is true for your email when you receive paperless statements.

Maybe you're about to lose access to a work or school email that was tied to your billing account, or you're about to shut down an old email that got swamped by hackers. If you forget to update this change in your online billing account settings, you could end up losing access altogether.

9. Con: Overdrafts From Automatic Payments

Many people who set up paperless billing also make the leap to automatic online payments. For anyone whose income is variable, or anyone who lives paycheck to paycheck, automatic bill payments can cause major headaches if you have insufficient funds in your account on the day that your payment is debited. This makes for something of a Catch-22, since many people in such a situation need the discount that an automatic payment provides, but the automation puts them in danger of overdraft every month.

The Fix: Ask for a Change of Payment Date

Most companies will allow their customers to request a specific payment date, particularly if they are using auto-pay options. If you deal with variable income or have trouble making it from one paycheck to the next, set up your automatic payments so that they are debited on the day your paycheck clears. If you have multiple bills that are auto-debited, you can stagger them through the month to coincide with your paydays.

Making Paperless Billing Work for You

Digital billing is here to stay, but it's far from a perfect system. Knowing which of the downsides are most likely to trip you up will allow you to plan ahead for the problems while you enjoy the benefits.

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