MBNA just refreshed its online payment service "Bill Pay Choice" by teaming up with CheckFree. When I logged onto my MBNA NetAccess today, I was asked to agree to new terms of the online payment service before I can pay off my MBNA credit card.

The new service allows customers to pay not only MBNA credit card bills, but almost any other bills, including utilities, other credit cards and mortgage. The service allows customers to pay MBNA credit card bills thru linked checking accounts, and to pay other bills thru either MBNA credit card or checking accounts.

In addition, if one pays at least 2 bills every month using MBNA credit card (or the only bill every month is paid by MBNA credit card), the service is free.

Too good to be true? And thinking of earning reward points simply by paying all bills thru MBNA? Here is the catch:

According to the FAQ, there are two types of merchants, in-network and out-of-network:

In-Network Credit Card Payment Transaction is a payment made through Bill Pay Choice using an MBNA issued credit card account as the Funding Account to a Payee that accepts credit cards as a means of payment through the Service. In-Network Credit Card Payment Transactions are treated as purchases in accordance with the terms of your MBNA credit card account agreement. As Purchases, these payment transactions will generally have all the normal dispute and charge back rights as outlined in your cardholder agreement and these payment transactions will generally be eligible to earn points in connection with certain MBNA rewards programs, subject to the applicable rewards program terms and conditions.

Out-of-Network Credit Card Payment Transactions is a payment made through Bill Pay Choice using an MBNA issued credit card account as the Funding Account to a Payee that does not accept credit cards as a means of payment through the Service. Out-of-Network Credit Card Payment Transactions are treated as Purchases, more specifically, Cash Equivalents, in accordance with the terms of your MBNA credit card account agreement. However, you do not have the right to dispute Out-of Network Credit Card Payment Transactions unless the dispute is based on the transaction not being processed in accordance with the Service terms and conditions. Furthermore, Out-of-Network Credit Card Payment transaction Purchases are not eligible to earn points in connection with any MBNA rewards programs.

And as you can imagine, most of the merchants (and all mortgage servicing companies and credit card companies) are in the out-of-network group, and no rewards will be available. Furthermore, this create additional profit for MBNA if the bill amount is not paid off in the next credit card billing cycle.

Actually, this service appears to be a customized version of MyCheckFree.com, which is also free (fees may apply when payment comes from credit cards).