Online Banking is Easy on Budgets

Online banks offer high interest rates on savings accounts and time-saving online account management tools. Grow your savings while saving money with Internet banking.

Online Banking Advantages

• Most online banks offer higher interest rates or other great deals on savings accounts and other banking products because these banks have lower overhead. There is no big building to pay for and there are fewer employees.
• Account information and services are available 24 hours a day, every day. An exception to this would be that online banks need to occasionally go offline for a couple of hours to update and maintain systems.
• Most online banks have no fees and very low minimum balance requirements, which saves you money.
• Just like traditional banks, online banks provide FDIC insured accounts.
• Online bank websites are easy to navigate and to learn to use. The best online banks provide customer service by phone and email 24 hours a day.

Online Banking Security

A Javelin Strategy and Research study reveals how paying bills and receiving statements by mail is much more likely to lead to identity theft than online banking does.

Online banks use the highest security available. Your data is encrypted, so account details are unreadable without your password and firewalls prevent malicious attacks. Check the online bank's FAQ, Privacy Policy or Security link for security details. If you do not find these links at the top of the web page scroll down to the very bottom to find them.

Online Banking Features

Most online banks provide the features listed below, but be sure to verify the features you would use are available before you sign up.

• View and print transactions, statements and the front and back of canceled checks.
• Create spending reports, set up a budget and assign income and expense categories to transactions to track a budget.
• Set up alerts to be sent to your email, cell phone or other wireless device. These alerts let you know when you account is nearing a minimum balance you set, when transactions are posted to your account and when bills are due.
• Funds can be transferred between your online and local banks, so you can easily make cash or check deposits locally and then transfer to the online bank. You can also transfer funds from your online bank to your local account to have access to cash via an ATM or human teller.
• Pay bills online either as they are due or set up payments to go out in advance. Payments can be made electronically or a check can be mailed directly to the payee using the phrase, "signature on file" in lieu of your actual signature.
• Many online brokerages offer savings and checking accounts as well, making it easy for investors to move money from investment accounts to regular checking or savings accounts.
• Apply online at your convenience for mortgages and other loans.

Online Banking Drawbacks

Keeping a local no minimum balance savings or checking account defeats the potential pitfalls of online banking.

• Making deposits can be a hassle. If you elect not to keep a local bank account to deposit funds to, and then transfer funds electronically to the online bank you will need to mail in deposits.
• You do not need to keep a local bank to use an ATM card to get at money in your online bank account, but if there are no local branches of your online bank you could get hit with ATM fees. Some online banks reimburse for ATM fees.

Locking Up Online Banking Security

Add the following online practices to your identity theft prevention routine.

• Do not use public computers to do online banking. If you use a public computer and walk away without closing the browser, the next person to use the computer can possibly get into your account by using the back button on the browser.
• Before accessing an online bank or doing any work using public WiFi, be sure to use a VPN (Virtual Private Network) service so no one can intercept your information on the network. HotSpot VPN is a good VPN to try.
• You need anti-virus, pop-up blocker, anti-spyware and firewall software whether you do online banking or not. Banking online without this protection is extremely foolish.
• Do not enter any account or personal information into an email form that looks like it is from your online bank even if the email is very convincing. It is best not to open any suspicious email, period. Go out the to bank's web site to enter your information instead, and contact the online bank right away if you get suspicious email.

Choosing an Online Bank

Popular large online banks are Wells Fargo, Bank of America, ING Direct, E*Trade Financial and CitiBank. Other quality online banks may have names that are not as well known but may offer the best interest rates, so search the Internet to find options. Narrow down those options by comparing features and the length of time promotional rates will be in effect.

The copyright of the article Online Banking is Easy on Budgets in Building Personal Savings is owned by Shelley Elmblad. Permission to republish Online Banking is Easy on Budgets must be granted by the author in writing.