Online banking is spreading like wildfire. Many users of online banking feel a sense of freedom that the new online banking services offer them.
Online banking is just what you might guess: You access a bank's Web site over the Internet and enter a user ID and password. This gives you access to your account information over a secure server. The most basic online banking sites let you see account balances, transfer money between accounts, view transaction statements, and pay bills electronically. Some online banking sites let you apply for new accounts and loans, order new checks and stop payments, and many other services. Some online banking services are free; others, like online bill payments, usually require a fee. You'll have to check with your bank to see what it charges for various online banking services.
At this time, most sites only let you see information on the accounts you have with their institution; however, it's expected that in the near future you'll be able to use a single financial Web site, such as your online banking site, to view and transfer funds between every financial account you own.
Online banking is a convenient option for people who work during normal banking hours because they can bank any time, regardless of whether the bank is open. Online banking is also a great time-saver. If you want to compare loan rates at a variety of banks, you can visit a dozen online banking sites in the time it would take you to drive to one bank and visit with a loan officer.
Another online banking feature that many customers enjoy using is online bill payment. You only have to type your payee's account information one time, and the online banking site will let you access that information the next time you need to send the payee money. Once you instruct your bank to pay a bill, the bank will pay the merchant electronically if possible, or the bank will print and mail a check. Most online banking services come with a small monthly fee for using online bill payment, usually $4 to $6 for 15 to 25 transactions per month. When you consider postage, the cost of new checks, and the time involved in paying checks by hand, online banking and bill payment pay for itself fairly quickly.
In addition, online banking is a great tool for checking your account transactions or figuring out whether a particular check has cleared. Many banks let you download transaction information directly into Quicken or Microsoft Money, saving you several hours of data entry each year. And for people who constantly travel, online banking can be an extremely important service that lets them check account balances and pay bills while on the road, where they might not have any other means of banking.
Online Banking Can't Do Everything. No matter how hard it tries, though, online banking can't match a teller or loan officer for providing a personal touch. Of course, that's not the only area in which online banking can't match up to traditional banking.
Some services simply aren't available yet through online banking, and many never will be. Safety deposit boxes, coin counting, and ATMs can't be duplicated with online banking. And if you try to endorse and deposit your paycheck by sticking it in your diskette drive while doing your online banking, you'll be sorely disappointed with your resulting account balance (not to mention the resulting health of your computer).
Because of these and other limitations, many people choose to use online banking as an aid to those banking tools they already use. They'll visit the branch offices when needed, and use online banking when it's convenient.
Another drawback of online banking for some customers is a concern over the safety of their account information online. Banks are already well versed in the needs for security, though, and they use the top security measures available for their online banking sites. Even so, it's important that you do your part to keep your online banking account secure. Here are a few tips that will help.
Don't send account numbers or balances by e-mail to your bank's customer service department; e-mail messages aren't secure. Protect your online banking password just as stringently as you would your ATM card's PIN. It's best to use a random collection of numbers, uppercase, and lowercase letters, and symbols in your online banking password, making it as difficult to guess as possible. Change your online banking password every 30 to 60 days.
Deciding whether you want to use online banking really shouldn't be a hand-wringing chore. After all, your current bank probably already offers at least the most basic online banking services for free. Try these services and see whether you find them convenient. If you find online banking is more of a hassle than it's worth, you can contact your bank, cancel your online access, and return to your favorite teller. If, however, you find the basic online banking services advantageous, you can try moving up to online bill payment and some other online banking services. Most banks will offer any additional services, such as online bill payment, for a free trial period.
After you've tried online banking for a few months, you may find that you need some online banking services your bank doesn't provide. If you think these services are important enough, you may want to consider switching to a bank with a more robust offering of online services. (See Picking The Right Online Bank for specific information on choosing an online bank.) If you decide to consider other banks, keep these tips in mind.
Make sure the bank has a customer service department specifically for handling online banking. If you ever run into an online banking problem, you're going to want to speak with someone who knows the ins and outs of the Web site. Most online banking sites offer demonstration versions of their online banking features. By trying a demo version, you should be able to figure out whether you're comfortable with the site's layout and rules. If you're having a hard time making a final choice between two or three banks, you may want to open a basic, no-fee checking account with a small balance at each bank. Then try the online banking features at each bank's site for a couple of months to see which bank you prefer. If you decide to use a trial such as this, be certain to make a few calls to customer service to test the knowledge and helpfulness of the employees.
Finally, keep in mind that online banking is supposed to make your life easier, not more difficult. Some people won't find online banking beneficial. However, most people will find online banking to be an important time-saving device. It may be the best self-service idea banks have ever introduced.