Banking online removes the necessity of relying on paper statements and bills in tracking finances.
Many people are turning to banking online as a way to save time and avoid the hassle of going to a brick and mortar banking facility. At the same time, many traditional banks - from small local banks and credit unions to larger national banks - are transitioning in some manner to online banking.
There are two types of online banks: online-only banks and traditional banks that offer some or all services online. According to Investorguide.com, there are advantages to both online only banks and traditional banks that offer online services. Traditional banks that offer online services typically provide customers the ability to conduct routine transactions (including account transfers, balance inquiries, and bill payments); allow customers to set up an account with virtually no paperwork; give access to account information 24 hours a day, 7 days a week; and allow customers to set up future bill payments to occur automatically. The fee amounts are about the same as with a traditional bank, but may become lower as traditional banks transition more customers to banking online and thus reduce the costs of brick and mortar banking.
Online only banks offer all of the advantages of traditional banks, but the fees may be even lower as these banks do not incur the costs related to maintaining brick and mortar facilities.
A few of the more common features of banking online are: convenience; online bill paying; online, checking, account aggregation, and the ability to apply for a loan or mortgage.
Many customers enjoy the convenience of online banking. They can check account balances and pay bills virtually any time day or night, and from any location that has Internet access.
Online bill paying is one of the most popular features when banking online. Customers can set up their accounts to have money transferred from various accounts to pay bills. Scheduled payments can also be set-up to pay select bills at the same time every month. Paying bills online saves money on postage and insures payments are made on time to avoid late fee charges.
Customers who bank online can monitor account activity in their savings and checking accounts. They may also be able to view the activity on their bank issued credit cards; get up to the minute bank rate information; and check the stock market.
Some online banks allow customers to fill out mortgage and loan applications online.
In addition, internet banking offers quick transaction speeds, usually as fast or faster than an ATM (Automated Teller Machine); it leads to greater efficiency in managing savings and checking accounts, as well as Individual Retirement Accounts (IRAs) and Certificates of Deposit (CDs). Banking online allows customers access a wealth of information including stock quotes, rate information, and portfolio management. Many online banking programs are compatible with home banking programs such as Microsoft Money and Quicken, which allows customers more effectively monitor their assets.
Banking online is relatively safe and secure, but customers should take precaution. Disadvantages to banking online include identity theft; lack of FDIC insurance, and no face-to-face contact.
Most banks that offer banking online have secure Web sites; however, a website's security status should be verified before entering personal information. The bank Web site should display a valid security certificate otherwise customers risk identity theft.
It is best to only use online banks that are FDIC insured. Most traditional banks that offer online services are FDIC insured, but some online only banks may not be.
Lastly, some customers may be a bit disconcerted by the lack of face-to-face contact when banking online. Online banks usually have customer service departments for online banking customers but sometimes there is no substitution for human contact.