Risk of direct debit to bank account

What I do to alleviate some of the risk of direct debit is using Wells Fargo’s online Bill Pay.

I use this for recurring charges because of the subtle difference in the relationships. Rather than telling the invoicer it is ok to take my money every month I am telling the bank to give my money every month.

Positives:
a) This gives the merchant no direct access to my money.
b) If the bank messes up and sends too much money, that is bank error and I have certain recourses.
c) I can cancel or change a payment up to one day before the payment date. I can easily skip a month.

Drawbacks:
a) If the bank messes up and sends too little or doesn’t send payment you still have certain recourses, but they aren’t as helpful as for overpayment.
b) The bill paying service is sending a check to the merchant (through a clearinghouse) so there is still the risk of mail delays or failures.
c) The bill paying service removes the money from your account on the payment date and sends a check to the vendor. If for any reason that check is not cashed I do not know how you go about getting your money back (say the check is lost by the USPS).

Other Issues:
a) There is no reason to pay a fee for a bill paying service. The service should make most of their money off of the float. They remove the money from your account and put it in theirs until the check they send is cashed.
b) If you are ultra-worried about account security do not use a third party service, use a service provided by a financial institution with which you have accounts.
c) For credit card payments where lateness incurrs severe late fees and interest rate increases break your monthly payment into two bi-weekly payemnts, each of which is at least the minimum payment for the card. This way two consecutive payments would have to be delayed in the mail or processing to cause problems. (Side bonus is you are making double payments on your credit card, which you should be doing anyway).

I’ll stop talking now.

I am going to look into the possibilty of paying my bills through the internet rather than by direct debit or by mailing checks. Does anyone have any experience with this? Maybe it has its own risks?

obfusciatrist, I assume you have an account with Wells Fargo?

I’ve been paying my monthly bills online for several months now, and haven’t had any problems. It’s not auto pay, you authorize the payment each month. Amount and date of transfer. There’s a big difference. The payees have no access to my account, the bank either sends them a check or electronic payment when I tell them to. It’s very convenient. My bank is the credit union where I work. I’ve had much better service from them than I ever did at any bank.
Peace,
mangeorge