The Pros And Cons Of Online Banking

To decide whether or not online banking is right for you, you need to understand its benefits and disadvantages.

Many banks have begun to offer customers the option of online banking, a practice that has benefits for both parties. The convenience of being able to access accounts at any time, as well as the ability to perform transactions without visiting a local branch, draw many people to sign up. It seems like an obvious choice to leave the hassles of traditional money management behind in exchange for this high-tech alternative. However, there are potential problems associated with banking over the internet of which customers may not be aware. Consumers need to weigh the advantages and disadvantages of online banking before signing up.

What is Online Banking?

Online banking allows people access all of their account through a secure bank-created website. Depending on the services chosen, a customer may simply be able to view the day-to-day activity of every account they have with a bank. Another convenient service lets people transfer funds, either between accounts or from electronic transactions. Many online financial institutions allow people to pay bills online, usually for a small monthly fee. To sign up, one needs to visit a local bank branch and complete necessary paperwork. At this point, they will receive a user ID and pin number, which will allow access to the bank's website.

Pros of Online Banking

The foremost advantage of online banking is that it is convenient for customers. Rather than having to go to the bank lobby or drive-thru during business hours, they can sign on to see their account at any time. Once online, customers can see what deposits and withdrawals have been made as well as whether or not the transactions have been completed. It is easier to keep track of fees charged to accounts, especially those accumulated from using foreign ATMs. This constant visibility allows people to keep closer track of account balances, which saves them from overdrawing their account and incurring overdraft charges. Many services allow customers to view a copy of checks that have cleared simply by clicking on a link. Funds can be moved from one account to another instantaneously. If a person has signed up for Bill Paying, they can approve the electronic transfer of funds from their bank account to the recipient's. There is no need to buy stamps, lick envelopes, or wait for bills to be received through the mail.

Some banking sites are equipped with programs like Quicken that allow consumers to schedule all of their bill payments for the month at once. Once authorized, all of these transactions happen more quickly than they would through a conventional bank. To attract customers, some banks are beginning to offer additional services. There are online forms for ordering shipments of checks and occasionally loan applications. Bank customers eagerly take advantages of these offers, which solve the problem of calling or visiting a branch location. Not only do most sites have up-to-date stock market information, but they may also give people the opportunity to manage investments. With all of these timesaving options, online banking is becoming so popular that many banks are closing physical stores completely. Those that maintain branches offer huge benefits for online members like higher interest returns on accounts and lower banking fees. This is because when banks transfer members to online status, they save money that would otherwise be spent paying tellers and printing paper records.

Cons of Online Banking

Although the benefits of online banking are undeniable, there are some inconveniences and concerns of which customers should be aware. Many people have difficulty relying on the security of online transactions, fearing the very real possibility of identity theft. If you have these concerns, obtain safety information and guarantees in writing before beginning an account. There may be a waiting period between signing up for online banking and receipt of the ID and password necessary for account activation. Make other arrangements in case you are temporarily denied access to you bank account. Remember that it may take some time acclimate yourself to the bank's website and set up account information. Have at least an hour available to complete the process. If you choose to pay bills online, make sure that recipients are capable of processing electronic payments. Otherwise, it may take several days for the payment to be credited to your account, which could result in accumulated late charges. You can also avoid this problem by making all payments several days in advance of the due date. For these and any other online money transactions, remember to print out a hard copy. In the event of errors, this will be your only proof. Obviously, you will not be able to make deposits or withdraw cash from your account unless you go to a bank branch. Another occasional problem with online banking occurs when the website is down, either for scheduled maintenance or because of technical problems. Make sure that you are provided with a bank phone number in case you cannot access your account.

Clearly, the choice of whether or not to bank online depends on many variables. Even if a person can see the benefits, they may be unwilling if they do not trust or have much experience with the internet. On the other hand, people may only sign up for limited services like account viewing. This will save them from safety concerns but will still give them daily access to account activity. If you decide that online banking is right for you, be sure to review the offers of several banks. Each has different fees and benefits that can make a big difference in how much online banking costs you. By comparing deals and educating yourself, you will find an online banking service that suits your needs.

© High Speed Ventures 2011