Online Banking

Online banking, also called electronic banking or Internet banking, has revolutionized the way people manage their money. Some bank customers have no physical interaction with their banks at all. They can conduct virtually all transactions electronically and get a complete picture of all their accounts and assets on their computer screen. Today, most banks of all types and sizes offer online banking services. There are even Internet banks that have no brick-and-mortar branches.

What kinds of banking services are usually offered online?

Basic online banking features include the ability to view account balances and account history, transfer funds and pay bills electronically. You may be able to receive e-mail alerts for such things as when an account balance falls too low, an account is overdrawn or a check has cleared. Many bank Web sites offer online customer support that may be quicker than waiting for someone to help you on the phone or in person.

Some banks also offer what is called account aggregation, where you can view all the accounts you own-even ones at other financial institutions-including investments and credit cards. Banks may offer the ability to download all that information into money management software programs on your computer.

What are the advantages of online banking?

You can bank any time of the day or night, 7 days a week and regardless of your location. Transfers made between your accounts usually post immediately. Transfers to accounts at other financial institutions take only a few days to post. Because so much of your financial information can be presented to you in one place, you can get a better handle on how to best manage your money.

How do I set up and use online banking features?

Simply notify your bank that you wish to access your accounts online. The bank will give you the Web site address as well as a user ID and password.

Once you are securely logged in, most banks' Web sites will present you with a summary page of all your accounts. From there, you can view account activity and conduct transactions. If you have a brokerage account with your bank, you may be able to view those accounts and make trades.

How secure is online banking?

Banks have taken enormous steps to ensure that their Web sites are fully secure, continually investing in the latest technology to provide the highest level of security available.

What are the advantages of Internet-only banks?

Customers can save a great deal of money by using Internet-only banks. Because they have much lower operating costs than brick-and-mortar banks, Internet banks can pass the savings on to their customers by offering higher rates and lower fees. Internet banks offer the same services and must follow the same federal regulations as traditional banks.

One drawback is that Internet banks do not have their own ATMs, so their customers must pay a surcharge for using other banks' ATMs.

How does online bill payment work?

More and more banks are offering online bill payment as part of their Internet banking services for free or for a small fee, usually no more than $5 per month. A growing number of companies will send you your bills electronically as well as receive online payment.

The bank's Web site should direct you as to how to set it up. You only need to enter your creditors' information once. From then on, you just select which account to pay from, the amount, which creditor to send it to and when to send it. You can also schedule automatic recurring payments. You are usually only allowed to pay bills in the United States, and you probably will not be allowed to make certain types of payments, such as paying your federal and state income taxes.

Your creditors either receive your payments electronically, if they are set up to receive them, or the bank will send a physical check through the mail.

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