Online Banking

If you're like most people, you've heard a lot about online banking but probably haven't tried it yourself. You still pay your bills by mail and deposit checks at your bank branch, much the way your parents did. You might shop online for a loan, life insurance or a home mortgage, but when it comes time to commit, you feel more comfortable working with your banker or an agent you know and trust. Online banking isn't out to change your money habits. Instead, it uses today's computer technology to give you the option of bypassing the time-consuming, paper-based aspects of traditional banking in order to manage your finances more quickly and efficiently.

This question is easy to answer. The following are typical online banking services:

Personal Banking

• Monitor account activity
• Transfer funds between accounts
• Online bill payments

Credit Card Banking

• Monitor account activity
• Advance money to checking account
• Organize credit cards

Small Business Banking

• Monitor account activity
• Transfer funds between accounts
• Online bill payments
• Direct deposit payroll
• Track payroll/taxes

Investment Banking

• Mutual funds: browse/real time quotes
• Bonds: browse/real time quotes
• Stocks: browse/real time quotes
• Retirement funds: browse/real time quotes
• Financial planning

All of these services can be performed on your home or business computer with a modem and special banking software. The software is provided when you register with a financial institution. Besides the special banking software, Quicken seems to be the most widely used software providing access from your PC to online financial services. Quicken programs enable the user to account and report for transactions submitted after online transactions are complete.
There are monthly fees attached to some of the services. These features may be very appealing in today's climate of time management and paper reduction. However, there are important questions that should be asked prior to signing up for these services.

Because not all banks offer the same services, find out what online services are provided by your financial institution. You will want to find out all the charges and fees involved and what types of transactions you can and cannot do online.

Example: In one of the categories of the chart, online bill payments, there is usually a monthly service charge ranging from 5 to 10 dollars. Some other charges may occur with transfers and opening and closing an account.
When you sign up for online banking, ask your banker how long it takes for each transaction to take place. Does a fund transfer take place immediately? If you pay your mortgage on a Monday, will the payment be debited from your account and credited to the recipient on time?

Example: You pay your electric bill electronically on Tuesday. Once your financial institution's processing department receives your "electronic request", it may still have to print out a check and mail the payment to the electric company. The result? Your electronic bill payment is not paid until five business days later. Find out the details from your financial institution.
Ask your banker about the security of online banking. Typically, the types of encryption (invisible coding, Encrypted Credit Cards and Smart Cards) used in online banking allow only you and the bank to see your account information. Ask your banker to explain the details in laymen's terms just how it works.

The same dangers of using a credit card are found with online banking. However, encryption (invisible coding) is being used and developed so that number codes can only be read by scanners. The card numbers will no longer be visible to merchants at the point of sales. Of course, there is no fool proof plan for safety; the banking industry is hoping that the percentage of misappropriation is less likely with this form of coding.