(MONEY Magazine) – It's undeniable: Paying your bills online pays off. It's fast. It's easy to set up. It's cheap, if not free. It means fewer late fees. It saves you hours a month. Plus, you can cut down on the paper clogging your mailbox (saving a few trees in the process and perhaps even reducing your risk of identity theft). And you'll likely feel more in control of your finances.

So why do three-quarters of consumers still pull out a pen, checkbook and stamps to pay bills (according to a TowerGroup survey)?

Maybe it's worry about the safety of sending payments over the Internet. Or is it inertia? Laziness? Fear of change? Well, whatever it is, get over it. In just a few paragraphs, we'll show you how simple--and safe--giving up that checkbook can be. You won't regret it.

STEP 1: Make it convenient

Deciding where to pay bills online may seem complicated. It's not. You've got two main choices: Pay billers at their own sites (most electric, cable, phone, credit-card, mortgage and insurance companies allow you to pay online) or use a single site that lets you pay them all. More than half of the people who pay bills electronically choose the first option, according to Forrester Research, and it's easy to see why: It's free, and you can use a credit or debit card as well as a bank withdrawal. And if your bill is due today, most utilities and financial service providers will post the payment to your account immediately (for a small fee, in some cases). Use a bank, and the payment may take two days or more to hit your account.

Still, we think it's smarter to consolidate all your bills at one website. If paying bills online is about simplifying your financial life, why would you want to bookmark a dozen biller sites and keep track of all those user names and passwords? Instant credit is nice, but banks and bill-pay sites let you set up automatic payments, schedule bills in advance or get e-mail reminders when a due-date approaches. Using a single site also makes it easier for you to keep track of your spending.

STEP 2: Banks are better

Once you settle on one-stop bill paying, you again have two options: financial websites, like MSN Money, Quicken and CheckFree, or your bank or brokerage. (For a look at the monthly fees and newest features at the major banks, brokerages and independent sites, see the table on the facing page.) The major independents have all the best features, like on-time payment guarantees and the option of viewing bills online. And bill payment is free as long as you limit yourself to the participating billers, generally utilities and credit-card companies. If, however, you want to handle all your bills electronically, you'll have to pay to do so at a site like Quicken, CheckFree or Yahoo.

That's why you're usually better off paying bills from the bank or brokerage where you have your main checking account. Though some banks charge $5 to $7 a month for online bill paying, a growing number, including Bank of America and BankOne, have eliminated the fee. Others routinely waive it if you keep a certain minimum balance in all your accounts. For instance, Wells Fargo, which charges $6.95 a month, says 60% of its customers don't pay a penny for the service. A few, like Citibank, have never charged. In fact, 33 of the top 50 U.S. banks offer free bill payment to some or all customers, according to a recent TowerGroup study.

STEP 3: Don't sweat the setup

At one time, setting up online banking was a time sink. No more. Sure, you have to sit down in front of the computer with your bills, create a menu of regular billers, enter the biller's address and your account number and specify whom you want to pay when. You may also want to tell your bank to pay some bills with money from your checking account, others from a money-market account. And a few sites, including Paytrust, CheckFree and Wells Fargo, let you set parameters for every automatic payment. For example, you can elect to pay your cable bill only if it's under $60. If it's more, have the sitee-mail you. Or just pay the minimum on your credit-card bill.

But recent advances mean that even with the most basic online bill-paying services, setup shouldn't take more than an hour--not much longer than writing all those checks and addressing the envelopes. In fact, you could create your bill-paying program one payee at a time, as bills come in.

Banks and billing sites keep streamlining the process. At some, including CheckFree and Bank of America, you'll find a list of major billers. With one click, you can enter the payment address in your menu. At Bank of America, you need only your account number and home zip code for most billers.

One caveat: If you do decide to use an independent billing site like Paytrust, you'll have to mail in a form and a voided check to authorize withdrawals from your checking account. At CheckFree, you may be able to do the entire process online if your bank is affiliated with the bill-paying service.

STEP 4: The dating game

Don't assume that electronic means immediate. Your bank pays your billers in one of two ways--electronic funds transfer or paper check. In each case, the money is deducted from your bank account right away. But even if the biller is set up to receive electronic transfers, it will take one to three days for your payment to be credited to your account. If the company or person you're paying can't accept electronic payments--your landlord, say, or your gardener--the bank will cut a check and send it by regular mail, so you'll have to allow four to five days for it to arrive.

To help you make sure your online payments are processed on time, most bill-payment sites include an activity page that lists all your payments and their status (scheduled, pending, processed).

EXTRA CREDIT: Go 100% paperless

Say you want to make bill paying even more effortless and paper-free. You can, for a price. With Paytrust's bill-management service--at $12.95 a month, it's double what most e-bill services charge--you not only pay all of your bills online, you also receive all of your bills electronically, from your phone bill to a handwritten note from your babysitter (which he must mail to your post office box at Paytrust, where the invoice is scanned).

When a bill arrives, Paytrust e-mails you. At the site, you can view (and even print) the bill, and pay the minimum or total due with a single click or file it away to pay later. You'll get another e-mail when a bill you've filed is coming due. You can view old bills online for a year and get a CD with your payment history at year-end. In fact, at this rate, just about the only thing the Web won't do for you is find the cash to cover your bills. That's something you still have to do the old-fashioned way.