So it occurred to me recently that in this day and age, there is really no reason to pay your bills by mail. Doing so is wasteful in at least two ways: 1) you lose most of your ability to profit from float and 2) you’re forced to use stamps, which are getting expensive.

Theoretically, you want to keep your money in an interest-earning account until the last possible second, but paper checks make this tough to do. Generally, you lose out on the period of float between the time you write the check and the time the funds are actually deducted. You could try to calculate when the funds will actually leave your account and update the balance then, but in my opinion, that’s too much of a pain and is likely to lead to mistakes. It’s better to pay by a method that’s immediate. Here are a few options:

Pay Directly Online

Most car insurance companies, electric companies, gas companies and so on will now allow you to submit your payment directly online. This is nearly always a good idea, especially if you can pay by credit card (then you can take advantage of cash back and an even longer period of float). The exception is if the company charges a fee for this service, and some do.

Use Your Bank’s Bill Pay Feature

If the company you need to pay charges a ridiculous fee for paying directly online (what a silly thing to do!), you can use your bank’s online bill pay feature. Most banks, even small ones, now offer this service. If you don’t have online access to your account, ask your bank to set you up. In general, the bank will mail out a paper check to whatever person or company you want - for free. I’ve even used this feature to send checks to my friends before. The bank doesn’t care if the recipient is a business or just Joe Schmoe.

I’m always a little bit wary that the bank isn’t going to mail the check out on time, so I don’t cut it too close. This means I give up float in favor of saving a stamp. If you’re good at math, you’ve probably already figured out that this does not benefit you if the check is really large. In such cases, it’s better to keep the advantage of float and pay for the stamp.

Pay in Person

On several occasions, I’ve also paid my credit card bills in cash by going to a branch of the bank that issued the card. The purpose of doing this is to take the greatest possible advantage of float. It usually isn’t worth it to go out of your way to pay in person unless the payment you need to submit is really large and you’d lose out on a lot of float.

For instance, let’s say you need to pay off a $10,000 credit card bill. If you’ve got a bank account or some other investment that earns you 5% interest, you’ll make something like $1.37 for each day you don’t pay off the bill (not counting any late fees the bank will assess if you don’t make your due date, so for goodness’ sake, pay on time). Paying by mail forces you to submit the payment earlier than any of the other methods I’ve described, and that’s not what you want. Generally, the advantages are much smaller than this, but hey, I’m all about sweating the small stuff!

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