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Internet Banking 101

by: sahil | last updated: August 24, 2009
Category: Personal Finance | Tags: Internet banking.

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Internet Banking 101

Internet or On-line banking has gained popularity in the last decade as the Net has become a secure, economical and faster method for banking related activities. However many people are hesitant to bank on the Internet either due to apprehensions about security or reluctance to change the established banking trends. Some tips and facts may help you in understanding and using on-line banking in an efficient manner.

Choose wisely. Searching for the right bank is very important since the Internet is a very broad platform and scams are not uncommon. If you find that the site has qualitative deficiencies such as spelling errors, too bright colors and cheap decorations then it is most probably a scam. Making sure that you opt for a FDIC (Federal Deposit Insurance Corporation) bank will guarantee security. A visit to the FDIC website will make things clearer as to their role in banking.

Signing up for an account. Signing up is easy; however caution is advised when doing so since the Information can be tapped by a third party if the connection is insecure. Make sure that you give out your details only if it has a SSL certificate. You may need your social security number, e-mail address and some other documents such as a copy of your passport. Make sure these documents are in order.

Secure the computer. If you are going to do your banking from home then it is recommended that you secure the computer. This can be done by installing anti-virus software, enabling the firewall, and enabling the security to medium-high. Other protection includes spy ware that tracks and eliminates any attempt to spy on the activities of your computer.

On-line banking terms. On-line bill pay is one of the most common features that you can design to pay your bills. This cuts down the time and efforts for paying through checks or cash. This service is offered free of cost at some banks and some require a minimum amount to be present in the account. Recurring payments for electricity and other services can be paid using the on-line pay service. This service directly and automatically takes money out of your account at a specified day or time.

Direct deposits. Direct deposits are possible through on-line banking and you don’t have to wait for the check to be processed. This means that the deposits will be directly credited to the account. This is a very fast and convenient method of keeping an eye on your account from the comfort of your home. Internet banking statements also show your account details so you will immediately come to know when the funds are going to be available.

Interest. Some on-line banking service providers give interest on savings accounts as well which is not possible in a traditional bank. The reason for this is that the bank also saves money because internet banking increases liquidity and profits. This profit is passed on to the customer who uses on-line banking services.

Security. Even after securing the computer there is no guarantee that the information will be completely confidential. Hackers are very tech-savvy and develop new methods to break through security systems. Ask your bank by directly contacting them as to what would be the outcome in such scenarios. Usually the bank takes responsibility for the complete amount if it is a case of missing funds. If the answer is vague or does not satisfy you then you can always opt for the services of another bank.

Electronic bill presentment and payment. Electronic bill payment is a method where the customers pay their bills using the internet. Some banks do these transactions real time and some wait for the next business day to do it. The real time option can be more economical if you are making payments for services outside of the country where currency exchange rate is applicable. These bill-pay system falls into two categories - pay anyone and restricted biller list services.

Pay anyone service. In this type of system the provider will facilitate payment to the payee even if the payee does not have electronic services. If the payee is unable to process the transaction then a paper check is made available to the payee on the payer’s behalf.

Restricted biller list. This type of service allows you to ay any biller who is in the service providers network in a direct manner through electronic checks only. Electronic checks are similar to paper checks in their function and are considered safe and a secure mode of payment.

Be ready for alternatives. Although you may set up an on-line account and start enjoying the services, it is advisable to keep other options open. Some merchants and companies may not be equipped with on-line banking and paper checks may be required for such occasions. It is better to keep your options open in order to avoid payment problems because the other party does not use on-line banking services.