Still on the Sidelines? How to Get Started with Online Banking
Internet banking has evolved into one of the most popular services offered by banks, with reports indicating that nearly 60 million U.S. households are using it. If you haven't tried online banking, is it something you should consider, even if you believe you're managing your finances just fine without it?
Here are some of the reasons consumers have found online banking beneficial:
Internet banking is available 24 hours a day, so you can handle your finances on your schedule, not just when your local bank branch is open;
Online transactions, especially electronic bill-paying, are generally faster than mailing a paper check;
It can help reduce clutter by eliminating paper bills and statements that may be piling up around your home; and
Using less paper is environmentally friendly.
"Online banking is faster, more convenient and more secure than ever," commented Jeff Kopchik, an FDIC Senior Policy Analyst who specializes in technology issues. "Many consumers appreciate the convenience of banking and paying their bills online, in addition to instant access to account information, which helps them manage money more effectively."
So if you are looking for a more convenient way to manage your money, here are suggestions from FDIC Consumer News on how to get started.
1. Check with your current bank. Talk to your banker or go to your bank's Web site to find out if it offers Internet banking services and whether there are any fees. Most banks don't charge their customers for basic Internet banking — such as reviewing your account balances and transferring funds between accounts — so signing up at your current bank may be the easiest, cheapest way to go.
2. If your bank doesn't offer Internet banking or the fees seem high, shop around. Visit the Web sites of other banks to compare their Internet banking services and the fees and limitations.
"Of course, it will take some time to comparison shop and then to open an account at a new bank, but if you are going to add convenience or save money, the time spent can be worthwhile," offered Luke W. Reynolds, Chief of the FDIC's Outreach and Program Development Section.
3. Check out the ratings. Each year, independent consultants rate various institutions' Internet banking services for reliability, speed and ease of use. You may want to take a look at these ratings before you pick an institution for online banking.
4. Learn as much as you can upfront about how to bank safely online. All banks are expected to conform to Internet banking security guidelines issued by the federal financial regulators (see Logging In...and Locking Out Fraud Artists).
However, before you agree to bank online, become familiar with what will be expected of you, too. "Review the bank's Web site for its tips for keeping your account information safe," Kopchik said.
What kinds of security measures will you be expected to take? "You should secure your own computer by installing and automatically updating antivirus software and firewall protection," offered Michael Benardo, Chief of the FDIC's Cyber Fraud and Financial Crimes Section. "And while most banks prevent unauthorized access by using 'encryption' to scramble account numbers and other private information, you need to take your own precautions."
Protect your passwords and personal identification numbers (PINs) by not using birthdays or other numbers or words that may be easy for other people to guess. Also, never send a bank or anyone else an e-mail with personal information such as your bank account, credit card or Social Security number, unless the e-mail is encrypted.
As with any banking service, be prepared to keep good records, so you can help spot and reconcile an error. "Another good thing about Internet banking is that it allows you to easily monitor transactions and account balances regularly," Benardo added. "Then, if you find a discrepancy or unauthorized transaction, promptly notify your financial institution."
5. Consider using mobile banking. That refers to the relatively recent ability to do your banking not just from your home computer but also from a smartphone or a "tablet" computer.
"Mobile banking can be a very convenient service for customers who travel extensively and want the option of accessing their online account from virtually anywhere, but be sure you understand all the terms and conditions that will apply, including any additional fees," said Luke Brown, an Associate Director in the FDIC's Depositor and Consumer Protection Division.
He added that mobile banking "also provides consumers who may not have traditionally done business with banks an opportunity to gain access to a wide array of banking products and services through a new channel."
If mobile banking is a service you are interested in, check the bank's Web site to confirm that your mobile device can be used and that you understand which services are available.