Online Banking Basics for Beginners
Bankers' hours take a whole new meaning when your branch is online
Online banking gives you the ability to manage your money online—over the internet, using your computer or mobile device—instead of visiting a bank branch.
Besides saving trips to the branch, you can view account balances, move money between accounts, and much more. In fact, you can probably accomplish more online than you can at a branch (and get better rates). You can also use third-party services and apps with even more to offer.
Here's everything you need to know to start banking online—or to take your current online banking routine to the next level.
If you’re just getting started, there are two ways to bank online:
- With your existing bank.
- Open a new account (possibly with an online-only bank).
Banking Online with Your Current Bank or Credit Union
If you already have a bank account, you’re halfway there. Almost every bank or credit union offers online services—it’s just a matter of using them. At a minimum, it’s a good idea to sign up with your bank’s app or website, and it might also be worth looking into online-only banks.
To start banking online with your existing account, you’ll need to sign up for electronic services. In most cases, that’s just a matter of going to the bank’s website, looking for “Online Banking” or something similar, and clicking “Register” when asked for a username and password. If you use mobile devices, you can do everything there instead—just download your bank’s app and register for a username and password.
Ask for Help
If the process is confusing for you, don’t hesitate to call (or visit) your bank and ask somebody to walk you through the process. They are eager to get you online because you’ll handle routine service requests on your own and use up less staff time in the future.
Open New Accounts Online
If you don’t have a bank account anywhere (or you’re going to try an online-only bank), it’s time to open an account. A fully-operational bank account allows you to save a lot of time and money, and banking online helps you make even better use of your time.
First, decide if you want to use an online-only bank (which does not have any brick-and-mortar branches). Online-only banks are more likely to offer higher rates on savings accounts and free checking. However, physical branches provide valuable services that you can’t get from an internet-only bank.
A Combination of Online and Off
The good news is that you can have the best of both worlds—use an account at a brick-and-mortar bank or credit union and open an account at an online-only bank. Internet banks are almost always free accounts (assuming you don’t bounce checks or overdraw your account) so it shouldn’t cost anything extra to keep another account.
Online Account Opening
If you want to start banking online, you might as well start by opening your account online. Most banks now allow you to complete your application entirely online (opening an online bank account s easy).
Need ideas on where to open an account? It's best to research and find a bank that really meets your needs, but it's hard to go wrong with these two classic online banks:
Things You Can Do Online
Once you’re up and running, it’s time to start using your account.
You can keep it simple if you like and just view your account balances. But if you're ready for more, you can move on to more advanced tasks.
One of the most useful features of online banking is free online bill payment. Instead of writing checks and mailing in payments, you can have your bank do all of that for you plus you’ll save money on stamps. Learn how to pay your bills online.
An online bank is a great place for your savings. Most online accounts pay more than traditional brick-and-mortar accounts, and internet-only accounts pay the best rates (typically with no fees or minimum account balances). Online banks also offer money market accounts and certificates of deposit (CDs) if you want to earn even more.
Get Free Checking (Possibly With Interest)
It’s getting harder to find free checking accounts at brick-and-mortar banks, but free checking is the norm at online banks. In fact, an online bank might even pay you interest on the cash in your checking account.
If you’ve got a mobile device with a camera, you can probably use it to deposit checks into your account—any time of day or night. You don’t need to find the time to make a trip to the branch or wait for the mail to deliver those checks to your bank. Learn how to deposit checks with a mobile device.
Along similar lines, if you’re still getting your wages paid by check, why not have the money automatically deposited to your bank account? Your employer will get funds to you more quickly if you sign up for direct deposit.
Need to pay a friend for your share of dinner or rent? There are several easy ways to send money to somebody without writing a check or digging for exact change. Most banks offer services for making person-to-person payments, while other services (think PayPal) simply act as a front-end to access your bank account. See how to make electronic payments (usually for free).
You can also move funds between your own bank accounts. If you want to transfer funds from one bank to another—or just from checking to savings at a single bank—an app or website makes it easy.
Research Transaction History
Need to know how much you paid for a particular item (or your average monthly utility bill)? That information is probably in your banking history, and you can look it up online. You can download statements and images of checks you’ve written if you need documentation for anything, or you can just review transactions to keep fraud out of your account.
You rarely need paper statements, and those papers just create clutter and make things easier for identity thieves. You can also save resources, including the paper used for printing, ink, plastic, and fuel used to ship those documents month after month. If you ever need a statement (when getting a mortgage, for example), you can always print the one or two you actually need.
Use Financial Tools
It’s wise to track your finances. If you know where your money goes, you’ll make better spending decisions and it’s easier to reach your financial goals. There are numerous third-party tools to help you do categorize your spending and build budgets (including Mint, among others), and your bank might already have built-in personal finance management tools. Going online allows you to download transactions or authorize your software to automatically get the information needed.
Know Your Balance
If you need to know exactly how much you have in your account—and how much is really available for spending—the best place to get that information is online.
If you need help with service issues, try taking care of business online. Especially if you’re not in a hurry, it might be easiest to send electronic requests to a customer service agent instead of calling. Self-service options are also available, and that may even be your fastest option. You can change your address, order copies of checks, and handle other routine tasks yourself.
In addition to deposit accounts (like checking and savings accounts), you can also borrow online. Traditional banks let you fill out applications, and newer online lenders make borrowing completely different—it’s easier to get approved, faster, and possibly even less expensive to borrow.
How to Bank Safely Online
Online banking makes life easier, but it also creates opportunities for thieves.
Fortunately, you’re probably safer when you take your finances online. Security features at financial institutions are robust, and you don’t have to worry about old-fashioned techniques like mail theft and forged checks. In fact, the U.S. Government encourages everybody to receive Social Security (and other benefits) via direct deposit, in part to reduce fraud.
Some fraud is out of your control, but your behavior is important—and it’s fairly easy to stay safe:
- Information requests: Think twice before you provide personal information online. Your bank will never contact you by phone, email, or text and ask for your account number, Social Security Number, password, or PIN (those requests are almost always phishing scams).
- Security software: Keep your devices up to date (including operating system updates, spyware and malware programs, and antivirus protection), and you’ll be immune to most threats. Avoid using old, unsupported computers for financial transactions.
- Public places: Avoid using public networks to access bank accounts (including free hotspots at coffee shops, and even hotel networks). If possible, save those tasks for when you’re at home or at work on a network you trust. If you have to conduct business while out and about, use your phone’s cellular data connection instead. Likewise, public computers (like those found at libraries) are not a good option for online banking.
If your account is affected by fraud or errors, there’s a decent chance that you’ll be protected (in your personal accounts—your business accounts are another matter). Federal law protects consumers from certain unauthorized transfers, but you have to notify your bank of any problems quickly to get maximum protection.
CFPB. "Regulation E: 1005.6 Liability of Consumer for Unauthorized Transfers." Accessed Feb. 20, 2020.