Save Time, Save the Planet, Bank Online
The pros, cons, and safety of banking and paying bills online.
Laura Adams, MBA
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Save Time, Save the Planet, Bank Online
This episode is about the pros, cons, and earth-friendliness of banking and paying bills online.
Get to Know Online Banking
You’ve probably done some online banking, right? You can log in, check your account balance, and see which payments and deposits have cleared. But can you view your credit card or mortgage balance on your bank’s website, even if they were issued from a different institution? Can you send a check to your brother without licking an envelope or buying a stamp? If not, you’ll be amazed at the time and paper that today’s online banking can save.
I’m going to highlight some of the common online features and benefits that large banks offer. If your particular institution is smaller, it may not be so technologically advanced. I recommend that you find out more about what’s available to you by investigating your bank’s website.
Online Banks
Online banking is not the same as an online bank. Online or virtual banks don’t have physical branch offices; they operate solely by way of online transactions and exist only as a website for customers who are Internet savvy and don’t want a lollipop from a drive-through teller. Virtual banks usually offer the same types of services and have the same federal regulations as a local bank or credit union. Because they operate with much less overhead than a traditional bank, they can offer some pretty competitive rates. Their low expenses can mean lower fees, higher interest, and more benefits for customers. Bankrate.com is a good resource to help you find virtual banks with the best rates.
The disadvantages of using an online bank include difficulty in getting cash and making deposits. Because online banks don’t have ATMs, you typically will be charged a fee to use one for a cash withdrawal. Some online banks allow you to leave deposits in an ATM. But if they don’t, here’s a tip to avoid having to make deposits by snail mail: open an account just for deposits at a convenient local bank, then transfer the funds to your web-only bank account. Hhmmhh, maybe you can still get that lollipop after all!
Traditional Banks
Even if your bank is a traditional brick-and-mortar institution, you can most likely still do online banking. A growing number of traditional national and regional banks offer some level of online banking. For example, you may be able to view account balances and initiate transfers between accounts. And most of the large banks offer online banking with all the bells and whistles.
Online Banking Benefits
Whether you choose a web-only bank or a traditional local branch, here are some of the best benefits available in online banking:
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Convenience. Do your banking day or night from any location with an Internet connection. For example, if you wake up in the middle of the night and realize you forgot to make an important account transfer, no problem! You can log in to your account and complete an online transfer even at three in the morning.
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Save time. Manage your bank accounts the fastest way possible. Get e-mail alerts in real time about unusual account activity or dangerously low balances.
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Efficiency. You can manage all your bank accounts such as checking, savings, money markets, CDs, and IRAs on one website. It’s simple to view account history, transfer funds, and view cancelled checks, for example.
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Software Compatibility. Download new transactions into accounting programs such as Quicken, QuickBooks, and Microsoft Money.
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Integration Tools. Account aggregation is a technology that allows you to view real-time balances on accounts, even those you have with other financial institutions. That includes bank accounts, loans, credit cards, and lines of credit, as long as you’re registered to access them online with a user name and password.
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Less Paper. You can opt for bank e-statements and e-bills. Going paperless saves trees and means less waste or filing on your part. You can always print out e-documents that you want to save.
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Free Bill Pay. Aaahhh, free bill pay. I saved the best for last. This is undoubtedly my favorite feature of online banking. Once you enter your bills and link them to a payment account, the bank can send your money electronically or mail a check to arrive on the day you specify. If you want to pay your brother $50 for the bet you lost, you just add him as an online bill. It’s as simple as entering his name, mailing address, and the amount to pay. You can set up one-time payments, recurring payments, and bill reminders. You can view a list of all your payments by their status—scheduled, in process, or paid. Let the bank do all the heavy lifting. They can pay any person or company on your behalf and you can quit stocking up on checks, envelopes, and stamps forever!
Online Banking Security
If you’re like many people who haven’t yet made the leap to online banking, security may be your primary concern. I don’t want to give the impression that online fraud doesn’t happen, because it can and does. When you register for online access to your accounts, you must be careful about the user names and passwords you create and how you manage them. [[AdMiddle]
The only thing I might recommend more than online bill pay and GoToMyPC is RoboForm. RoboForm is a fantastic password manager that can automatically generate secure random user names and passwords, store them securely, and automatically log you in to all your online accounts. It even has a way around keyloggers—those pesky hackers who can track what you type on your keyboard—by not using the keyboard to enter your passwords! You can download their free version at roboform.com. I swear they’re not a show sponsor, but you really will wonder how you ever lived without them.
Join me next week when I’ll discuss much more about identity theft and how to stay safe on the Internet.
Administrative
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Chi-Ching, that’s all for now, courtesy of Money Girl, your guide to a richer life.
Woman on Computer image courtesy of Shutterstock
About the Author
Laura Adams received an MBA from the University of Florida. She’s an award-winning personal finance author, speaker, and consumer advocate who is a frequent, trusted source for the national media. Money-Smart Solopreneur: A Personal Finance System for Freelancers, Entrepreneurs, and Side-Hustlers is her newest title. Laura’s previous book, Debt-Free Blueprint: How to Get Out of Debt and Build a Financial Life You Love, was an Amazon #1 New Release. Do you have a money question? Call the Money Girl listener line at 302-364-0308. Your question could be featured on the show.