Online Banking for Beginners
Making Payments, Saving, and More 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 make payments online, view account balances, move money between accounts, and much more. You can bank online with your existing bank, or even open a new account 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. 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.
Opening a New Account
If you don’t have a bank account anywhere—or you’re going to switch to an online-only bank—you'll need to open an account. If you want to start banking online, you can start by opening your account online.
To open a new bank account, you'll usually need a government-issued ID, a second form of identification, as well as your personal information, such as your Social Security Number, and address. You'll usually also need a certain amount of money to open the account.
Need help choosing a bank account? Make a list of your needs and must-have features, and do some research to find the bank that matches most—or all—items on your list.
Since online-only banks lack brick-and-mortar branches, you'll need to be somewhat tech savvy with website and apps. Some of the advantages of online-only banks are that they're more likely to offer higher rates on savings accounts, free checking, and fewer (and lower) fees.
Online Banking Functions and Features
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. You can set up one-time payments or choose recurring payments for bills that are the same each month.
An online bank is a great place for your savings. Most online accounts pay more interest than traditional brick-and-mortar accounts, and internet-only accounts tend to pay the best rates. Online banks also offer money market accounts and certificates of deposit (CDs) if you want to earn even more.
If you’ve got a mobile device with a camera, you can probably use it to deposit checks into your account 24/7. With mobile deposit, 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.
If you're not doing it already, it's wise to look at having your paychecks automatically deposited into 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 (such as PayPal) simply act as a front-end to access your bank account.
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 usually have the option of going paperless with online banking. And 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
If you know where your money goes by tracking your finances, 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.
Check 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 opening 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 Securely Online
Online banking makes life easier, but it also creates opportunities for thieves. Some fraud is out of your control, but your behavior is important—and it’s fairly easy to stay safe.
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.
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.
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 your personal accounts will be protectedn(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.
Consumer Financial Protection Bureau. "Online and Mobile Banking Tips for Beginners." Accessed May 10, 2020.
Consumer Financial Protection Bureau. "Checklist for Opening a
Bank or Credit Union Account." Accessed May 10, 2020.
Bankrate. "The Pros and Cons of Brick-and-Mortar Banks vs. Online Banks." Accessed May 10, 2020.
U.S. Department of Homeland Security. "Banking Securely Online." Accessed May 10, 2020.
Federal Deposit Insurance Corporation. "Protect Your 'Cyber Home' With a Solid Foundation." Accessed May 10, 2020.
CFPB. "Regulation E: 1005.6 Liability of Consumer for Unauthorized Transfers." Accessed May 10, 2020.