Having your bills mailed to you month after month is bad for the environment. But many of us can't break the practice because paper statements are key to our financial housekeeping.
With Earth Day around the corner on April 22, you're likely seeing an uptick in banks, utilities and other service providers pushing you to receive statements online. The benefits of going paperless are obvious — it's environmental, cuts down on clutter and lets you access bills wherever you have an Internet connection.
Making the switch can even save you money. More businesses are waiving certain fees for customers who go paperless.
Before making the leap, however, it's a good idea to understand the potential pitfalls and whether you'll need to adjust your financial habits.
Unlike paper statements, which can be neatly collected and filed away, going paperless on multiple accounts will mean having that information scattered under different user names and passwords. You may also be surprised to learn you have to pay for copies of some older statements.
"If you have a system for organizing your paper statements, you should think about how that's going to translate online," said Jim Bruene, founder of the Online Banking Report, a monthly newsletter.
It's not clear how widespread paperless statements are because many companies don't disclose their figures. Bank of America says about a third of checking and savings account customers are signed up for e-statements, but other companies cite far lower numbers.
If you're thinking of going paperless, here are three tips to consider:
Don't go on autopilot
When considering a switch to e-statements, the primary concern is how it will affect your vigilance about paying and reviewing bills.
One reason for the slackened oversight is that routine notifications that a statement is ready can be easy to ignore, particularly if you get a high volume of emails. So before agreeing to go paperless, consider the account in question and what type of action it requires from you.
For example, there likely won't be any repercussions if you fail to check an online statement for a savings account. With important bills such as mortgages, on the other hand, there are steep late fees for missed payments.
So if you feel that a paper statement on the kitchen counter helps you remember to pay a bill, consider sticking with the strategy for those accounts until you're more comfortable managing finances online.
Another option with electronic bills is to set up automatic payments. If you go this route, be careful about slipping into cruise control. You don't want to get in the habit of deleting notifications about scheduled payments without clicking on the link to scan the bill. This could keep you from catching incorrect or suspicious charges until much later.
Another factor to keep in mind when transitioning is that you might have more user names and passwords to remember. It sounds like a minor inconvenience, but there's a good chance you'd put off logging into an account to see a statement if the login information isn't handy.
One way to avoid this is to download a program such as Last Pass or RoboForm. These programs store user names and passwords on your computer and automatically fill out login pages. All you do is enter a master password. LastPass is free and RoboForm costs about $30.
Know how to get older statements
If you keep detailed financial records, one concern with going paperless is how long electronic statements will be accessible online. The answer varies depending on the company. Banks even have different policies depending on the type of account in question.
At Citibank, for example, customers have access to three months of statements for checking accounts and 12 months of statements for credit cards. Other banks let customers search much farther back; Chase and Wells Fargo, for example, keep checking account statements readily available for up to seven years.
Most banks also give customers the option to request older statements that are no longer online. But how far back the bank can go varies. And if you want a printed copy, there's likely going to be a fee, usually of a few dollars.
Access to older bills and statements varies at service providers too. At Verizon, cellphone customers get up to 12 months of past statements. Customers can also request older statements dating back seven years for $5 per copy. In other cases, utilities or other companies may provide older billing information, but without a detailed breakdown.
Ultimately, online archives are likely to be at least as extensive as the paper records you keep at home. But it's still a good idea to know exactly what you're signing up for.
Claim rewards for switching
Companies save big when customers go paperless. Not only do they save on postage and mailing costs, but they also increase the odds that customers pay bills on time and lower marketing expenses since materials can be sent online.
So before you agree to go paperless, see if there are any financial incentives for doing so. Companies of all types, including banks, utilities and investment managers, offer perks and prizes to encourage customers to switch.
This week, for example, Wells Fargo announced that customers who sign up for e-statements through June 3 will be entered in a sweepstakes to win a Nissan LEAF electric car or $40,000. The bank is also giving away five runner-up prizes of $5,000 each.
Consolidated Edison, a power provider in the Northeast, occasionally holds sweepstakes with smaller prizes. Right now, customers who sign up for e-bills before April 30 will be entered to win an iPad 2. The utility also donates $1 for every customer who signs up to a nonprofit tree planting initiative.
At Vanguard, clients with fund accounts who opt to go paperless get a $20 annual service fee waived. The fee is only charged on accounts with a balance of less than $10,000. The investment manager also notes that the millions of dollars it saves in mailing costs are passed on to clients.