Online Banking: Should You or Shouldn’t You?
Does being able to check the balance in your checking account at 2 a.m. have a certain appeal? How about having your mortgage payment made while you’re vacationing in Europe? Online banking and bill payment comes with many conveniences, but it’s not for everyone, says the California Society of CPAs (www.calcpa.org).
If you’re computer savvy, transfer money between accounts at the same bank or credit union, and pay more than a few bills a month, you may be a good candidate for electronic banking and bill payment. Here are some questions that can help determine whether you should or shouldn’t take your banking online.
What are the key advantages of online banking?
Online banking allows you to access your bank accounts and pay bills at home, at work, on business trips or on vacation. All you need is access to a personal computer and an Internet connection. Some online banking systems allow you to download banking transaction information to personal software applications, such as Quicken and MS Money, making it easier to manage your finances.
What types of transactions can you do online?
With online banking, you can check your account balances and view account activity. This makes it easy to verify ATM cash withdrawals, debit card purchases and other transactions you may forget to enter into your checkbook register. You can also transfer money between your accounts, view statements online and, in some cases, even see the front and back of paid checks.
Are there transactions that cannot be COMPLETED online?
When it comes time to make a deposit to your account, you’ll need to stop by your local branch, although you can arrange for direct deposit of your payroll, government or dividend checks. You also can deposit checks and cash through your bank’s or credit union’s ATMs or its affiliates. And you can withdraw cash through an ATM, via a teller or by requesting cash back when you make a purchase at a supermarket or other store that accepts ATM cards.
How does online bill payment work?
To set up your online bill payment account, you will need to provide your bank or credit union with the account number and the correct remittance name and address for each company you plan to pay electronically. To pay bills, you enter your payment requests online. The bank or credit union debits your account for the appropriate amount and pays the payee either electronically or by check. You can schedule payments in advance or arrange to have regular, fixed-amount bills, like your mortgage or loan payment, paid automatically each month.
How quickly do my transactions and bill payments post?
While electronic bill paying may be easier, it’s generally not faster. Most banks suggest that you allow anywhere from five to ten days for your payment to reach the payee. To help you monitor your payments, most online bank sites provide a payment activity page that shows the status — scheduled, pending, or processed — for all your payments.
What fees should I expect to pay?
Most banks or credit unions don’t charge for online banking, but fees for electronic bill payment vary. They may charge a monthly fee for a specific number of bill payments, with an additional per item charge when you exceed the limit. Some offer free or discounted electronic bill paying for the first two or three months or when you maintain a specified balance in your accounts.
What if I have a dispute about a transaction or a bill payment?
Your bank or credit union is required to provide you with its error resolution procedures. Be sure to follow the rules closely, and pay particular attention to the deadlines for reporting errors.
How secure is online banking?
Most banks use 128-bit encryption technology, which is the most secure way to send information over the Internet. In addition, online banking services require some combination of user name, password and personal identification number (PIN) to access your account.
CPAs say that while this should give you confidence regarding the security of your transactions, be sure to read your bank’s or credit union’s privacy notice on its Web site to learn specifically how your data is protected.
