Review: BillFloat – Can’t Pay Your Bills? They Have you Covered (For A Fee)

Written on August 28, 2010 – 12:21 pm | by Alicia Ross

It’s the 1st of the month and time to pay the bills. After unexpected medical bills or some other financial emergency bungled your budget earlier this month, you realize there’s a bill or two your funds can’t cover. What do you do? You float it.

BillFloat, founded in 2009 and incubated by PayPal, has a simple, fresh solution to an old problem—what to do when you can’t pay the bills.

Instead of turning to Mom and Dad, friends, expensive payday loans, high-interest bank loans, or skipping payment altogether and risking the consequences (penalties, credit damage, getting services terminated), BillFloat pays your bill for a fee as low as $4.99 and you pay them back within 30 days. Plus, the site requires no credit checks and uses its own “decisioning engine” to determine qualified customers.

Here’s how it works:

Sign up as a BillFloat customer for free, where you provide basic contact information as well as social security number, banking routing, account number, and bank username and password. This information is required to verify your bank account to ensure your ability to repay. BillFloat also assures that they use the same financial security and data protection that big banks.
Select from over 3,000 billers in the database, such as cable providers and insurance companies, to pay your bill direct to them. Input your bill amount, date that BillFloat should pay it, and Billfloat gives you a fee depending on how high the bill is. For example, a $60 Comcast bill has a $4.99 service fee, while a $225 All-State car loan bill has a $14.06 fee.
Pay back Billfloat within 30 days.
As a bonus, when you pay back BillFloat on time, your Bill Payment Power goes up and BillFloat can extend you more credit to pay bills (up to $1,000) and lower your fees.

In a nutshell, you pay a super-low fee to float your bill for awhile, get a 30 day extension, protect your credit, avoid service termination, and use a flexible, affordable alternative to mainstream bill-payment options that otherwise cost you money (expensive loans and bank fees) and stress (borrowing from family).

So what’s the catch?

It sounds like a savvy service that is ripe for recessionary times when cash is tight for struggling consumers. What makes it dangerous is that it’s so easy and affordable to do. It can initiate a nasty habit of relying on BillFloat to float your bills if you are prone to paying late or breaking the budget. Plus, the Bill Payment Power is a clever incentive to snag repeat customers by giving an incentive to keep using BillFloat to float bigger bills for higher fees.

“We will provide consumers relief from the $32 billion in overdraft protection, non-sufficient funds, and late fees that are paid by American families every year,” said BillFloat’s CEO to TechCrunch. As a last resort when you are strapped for cash and bills are piling, BillFloat is one of the better alternatives out there to keep up with payments. But only once in a blue moon. Remember that your best, fee-free bill payment option is to budget to make sure you never have to rely on any other bill-paying option other than yourself.

Bottomline: BillFloat is a start-up with a new, low-cost bill payment service that covers your bill and gives you a 30 day extension to pay back.

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