Online Banking
By: Source: AARP.org Date Posted: 2005-03-20 12:08:58
When you're busy managing your personal life, as well as your financial affairs, it's not always convenient to get to a bank. Thanks to the Internet, you no longer have to rearrange your personal schedule to accommodate your banker's hours. Your computer can now help you do your banking at any time of the day or night.
Online banking systems let customers plug into a host of financial services from the privacy of their own homes. Specific services will vary from bank to bank. However, most online banks let consumers:
- • Check the balances in their accounts.
- • Transfer funds among accounts.
- • Pay their bills electronically.
Most online banks offer savings accounts, checking accounts, money market accounts, and certificates of deposit. More sophisticated online services let their customers:
- • Download account information onto their home computers.
- • Apply for loans.
- • Trade stocks or buy shares in a mutual fund.
Choosing an Online Bank
If you're pleased with your current bank, check to see if it offers online services. If the fees are reasonable, you may feel better banking with a "known quantity." If you're choosing a new bank, look for one that is insured by the Federal Deposit Insurance Corporation (FDIC), is financially sound, and provides the services you need at a price you can afford.
What You Need
Older, more established online banks require consumers to install money management software like Quicken or Microsoft Money. Newer banking services let customers connect directly to the bank's web site and use the bank's software.
What You Pay
Banking online is more expensive than banking in person. Fees typically range from $3.95 to $6.50 a month for basic services. Some banks charge an additional monthly fee - ranging from $4.50 to $6 - for electronic bill payment.
Opening an Account
Once you've chosen your online bank, you can usually complete your account application on the bank's web site. You then activate your account by sending the bank an initial deposit and a signed, signature card through the regular mail. When your online account is established, you can have your salary or pension check deposited directly into that account. You can also mail your deposits to the bank or electronically transfer funds to your online account from another financial institution.
Paying Bills Online
When paying a bill online, you direct your online bank to send a check for a specified amount to a specific individual or company. The bank deducts the amount of that check from your account. It then either mails the payee a paper check, or transfers funds from your checking account directly into the payee's account. Your monthly statement, which you view online, lists all your transactions.
Most online banks also provide you with paper checks to use when you need to pay a bill or make a purchase in person. You'll also get an Automated Teller Machine (ATM) or debit card that you can use to obtain cash or make purchases.
How Safe?
You won't be able to do business with most online banks unless your Internet browser supports the highest level of encryption. This prevents transactions from being read over the Internet by unauthorized parties.
For More Information
Federal Deposit Insurance Corporation (FDIC)
- Visit the FDIC web site to check on the financial status of any online bank. On the "Find an Institution" page, you can type in the name of a bank and receive information about its FDIC insurance, and a summary financial report.
- URL: http://www2.fdic.gov/idasp.main.asp
Tips for Safe Banking Over the Internet
- This brochure, published by the FDIC, offers information and tips to help you if you are thinking about or already using online banking systems. The brochure tells you how to confirm that an online bank is legitimate and insured. It also provides information about keeping your personal information private and secure, understanding your rights as a consumer, and getting help from banking regulators.
- URL: http://www.fdic.gov/bank/individual/online/safe.html
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