Most banks offer online banking services that enable you to pay your bills, transfer money, and access a record of your checking account transactions from your web browser. Banking from the comfort of your sofa, at any time of the day or night, makes everything you do with your finances a bit easier. Here are five advantages of online banking.
Pay Your Bills Online
You can use your bank's website to pay your bills online and never worry about your check getting lost in the mail. Most banks have a section in which you set up payees. You will need to fill out the information once, and then you can simply choose that payee every time you need to make a payment.
Most banks will let you set up a recurring automatic payment in the same amount every month. This feature is helpful for an expense like a car payment or insurance policy that doesn't change from month to month.
Alternatively, you can authorize a payee, such as an electric utility or mortgage provider, to automatically debit the amount of money you owe from your account. You can set up the automatic debit by first going to the company's website and creating an online log-in if you haven't already done so. You will then need to go to the billing or payments part of the website and click on a link that mentions automatic payments. You will have to provide the number of the checking account you want the money to be debited from, as well as your bank's routing number.
Authorizing a payee to debit from your account gives the control for the payment to the vendor, not to you as the payer. It is better to set up a recurring payment from your bank account to be sure you are paying only what you owe.
View Your Transactions
Online banking allows you to access your account history and transactions from anywhere. This is the quickest way to see whether a transaction has cleared your account. It also enables you to find out about any unauthorized transactions more quickly, so you can dispute them right away.
Many banks will show you your pending transactions. These are transactions that were initiated on the current business day or after the close of business on the previous business day and so have not yet been completed.
Pending transactions may not reflect the exact amount of the purchase. For example, if you pay for a bill at a restaurant with your debit card, the tip will often not be included in the amount of the pending transaction. The entire amount, including tip, will be shown in your account once your bank has authorized the total payment.
Transfer Money Between Accounts
You can quickly transfer money between accounts when you do it online. It's more convenient than going to a bank in person or using an automated phone service, which requires you to provide information when prompted.
If you are transferring money between different types of accounts at the same bank, the transfer should go through on the same day. If you're transferring money to an account at a different bank, it may take up to three days.
When you have more than one savings goal—say, for the down payment on a home and for the cost of a wedding—you might consider opening multiple savings accounts and easily transfer money from your checking account into them. Savings accounts tend to have lower minimum balance requirements than checking accounts—and some banks don't require one at all—so you won't have to start out with a lot of money.
Bank on Your Phone With a Mobile App
Most banks offer a mobile app that allows you to more easily take advantage of online banking on your phone. You can quickly check up on your accounts when you are out shopping, transfer funds so you don't end up overdrawing, or make sure a merchant hasn't double-charged you.
Banking apps typically let you deposit checks by using the camera on your phone to take photos of the front and the endorsed back of the check. You usually have to write something like "For mobile deposit only at [name of bank]" on the back of the check as well.
Make sure you are using your banking app on a secure network; to avoid having sensitive information stolen, never access it using public Wi-Fi.
Sync With Your Budget Applications
Many budgeting apps—such as Mint and PocketGuard—can be synced with your online banking information. That feature makes sticking to your budget much easier.
If you have a spouse or partner you share bank and credit card accounts with, you might want to look for an app that enables you to easily sync your info with each other. Better Haves, HomeBudget, and Honeydue, for example, are budgeting apps designed specifically for couples or households.
Frequently Asked Questions (FAQs)
What kind of accounts do banks offer online?
The types of accounts available will depend on the bank. Online-only banks generally offer basic services, such as checking and savings accounts, and some may also offer CDs, money market accounts, investment options, and loans. Traditional banks that offer online banking will usually allow you to access their full range of services online.
Is online banking safe?
Online banking is safe as long as you are careful. Don't log into your account on a public computer or public wifi, and use a unique password that is difficult to guess. Two-factor authentication can make it more difficult for someone to break into your account. And if you use a banking app, be careful whom you allow to use your phone.