Exploring Online Banking

Online banking can be extremely convenient, time-saving, and cost effective. However, it can also be very frustrating. I would suggest familiarizing yourself with the online banking systems of any of the companies you bank with. Most banks offer this as a free service to their customers. Even if you are familiar with internet banking, I would suggest either reading the online FAQ or tutorials. You may also contact the bank directly to have them walk you through your new service. Keep in mind that each bank may have different policies regarding funds availability and transfers.

One issue that concerns a lot of customers is safety. Make sure to choose a unique user id and password. Also, make sure any password prompts are something only you would know the answer too. Never answer an email or click on a link that asks for your personal or account information. Your bank has this on file and will not ask you for it unless you call in. Then they only ask to confirm your identity. These emails usually look very professional and contain the bank logo and contact information to make them look more legit. Never give this information over the phone or internet through any transaction you did not initiate. Remember to keep your virus software up to date. This will help prevent your account from being hacked. Online banking can actually be safer than using the regular channels. A major plus to online banking is that you can choose to receive only online statements. This can prevent your personal and confidential information from being lost in the mail.

Online banking is very convenient. You can transfer funds from one account to another with a click of a button. There is no longer a need to call in over the phone or stand in long lines at the teller.

With online banking you can instantly pull up and print your statements, check copies, etc. You can usually see the date of your transactions and any pending transactions. One thing to keep in mind is that it is still important to keep your own check register to verify that the information on the screen is correct.

You can quickly and conveniently pay your bills online with a click of a button, without paying for stamps. Keep in mind that you do need to schedule payments in advance as the may be made electronically or by check. You can usually schedule automatic or one time payments with the system saving the account information for future payments. Some online banking services even offer bill reminders. This is a great feature. If you are not familiar with this option you can usually contact your bank’s online banking department and have them walk you through it.

Another important thing to remember is that online banking balances and information can change daily. It is not always 100% up to date and accurate. If you are checking your balance you must make sure all of your purchases have cleared before spending that money. Otherwise you may risk over drafting your account. Still, it is beneficial that you can see this information daily instead of waiting for your monthly statement to come in the mail.

There are advantages and disadvantages of doing business with a bank that is only available online. The most appealing factor in these banks is the high interest rates you can earn. For example, one bank currently offers a high performance money market account with no minimum balance requirements, no monthly fees, and an interest rate of 5.05%. Most regular banks currently only offer that rate on a certificate deposit (CD) account that has a penalty for early withdrawals. Online banks are able to do this because they do not have to pay to run or employee branches. This can cause frustration when you can only contact the bank by phone or over the computer to resolve a problem. In my experience these banks have very friendly customer service representatives who do not have the authority or knowledge to get anything done for you. It can also be very time consuming.

One bank I have dealt with accepted a deposit from me from an outside account then blocked the account out saying they required more information. While this is understandable, I find it hard to believe that they would accept an external transfer from my other bank if they were concerned about my identity. This situation was very difficult and time consuming because of the limited customer service hours, the lack of correspondence from the bank, and the hassle of faxing the same information in repeatedly for over 2 weeks because the fax was too dark, too small, hard to read, etc.

Had there been a local branch I could have simply taken my documents into the branch and had the situation taken care of. Also, because these banks are so impersonal, you will repeatedly hear answers like “it’s in your schedule of fees” rather than a direct answer to a question you have asked. These banks are also extremely slow when answering online messages. You would think this would be the fastest way of correspondence considering they are an “online” bank.

Another drawback is that the “conveniences” can sometimes cause major inconveniences. So many things can be done with a click of a button that it is easy to make careless mistakes. You may pay too much on a bill, transfer too much money, or transfer to the wrong account.

The most important things to keep in mind with any type of banking are to read all documentation and mailings that are provided to you. With online banking it is very important to read and fully understand the bank’s transfer policy. Also, make sure that the bank has your accurate contact information on file. You also need to fully understand the bank’s cutoff times and funds availability.