Banking has almost always been done in person, with the aid of a bank teller and a physical location. As technology has improved so can bank through means that do not rely on you going to the brick and mortar location. This has eventually come to include banking over an Internet connection. If you haven't used the technology before you may not fully understand what is online banking. The more you know about online banking the easiest it is to protect yourself and your information.
What Is Online Banking?
Online banking is the process of conducting your banking through an Internet connection. Instead of going to a physical location you perform the banking over a computer or your mobile phone. You create an account online and can view all of your financial information through your Internet-connected device.
Different online banks provide different services, so it is important to look around to see what kind of services the bank provides. Some banks might allow you to deposit checks with the aid of your mobile phone. With this feature, you snap a picture of the check and submit it to the bank (then hold on to the check for your personal records).
Most online banks will allow you to transfer money between accounts and make payments on your credit cards, car loans and other bills you have to make payments on. Just check with the bank to see what kind of fees are connected to transfers. Some banks have transfer limits and if you transfer money between accounts more than you're allowed you will be charged a fee. Due to this, it is important to look over all the fees a bank might charge based on the services offered.
Additional features you can take advantage of from most banks includes your ability to freely see your transaction history, receive paperless statements sent to your email account (or even texted to your mobile phone), plus you can view images of processed checks and set up account alerts and reminders for making payments.
Online banking is designed to make your banking life easier while saving time. These are the main reasons why individuals turn to online banking. However, beyond what is online banking, you might want to know the difference between service providers and also how to keep your information safe from potential hackers.
Online Banks VS Traditional Banks With Online Banking
One important consideration you need to make in what is online banking hinges on whether you take advantage of the online banking services offered by a traditional bank, or if you turn to an exclusively online banking service provider.
Most banks now provide online banking options. Whether you are a member of Bank of America, Comerica, Citi, or any number of the other regional banks throughout the United States, most of these banks provide online banking in some shape or form.
On the other side of the spectrum though is an exclusively online bank. This is a bank that does not have branches but instead only exists online. For example, American Express provides online banking services and savings accounts, yet it does not have local branches. There are other standalone online service providers that may not have any attachment to a current credit card you use. So as you begin to answer what is online banking, you will need to decide which is best for you.
Benefits Of Traditional Banks With Online Banking
The main benefit (beyond what the online banking experience brings you) is you still have a local branch to visit should you need it. This is helpful if you have questions you'd like to discuss with a person face to face. Whether you're applying for a loan and you want to openly discuss the application with a person, or if you simply want to take your change in to have it cashed out, these are the main benefits to using a traditional bank with online banking services.
Exclusively Online Banking Benefits
So what kind of benefits are there when using an exclusively online banking service provider? You don't have the physical location to visit (some may have a branch in large cities like Los Angeles, Chicago, or New York, but typically this isn't an immediate option), so why would you even consider an exclusively online bank? After all, even if you rarely need a brick and mortar location it is nice to know it is an option. Well, with an exclusively online bank you will almost always have better interest rates on your accounts.
For example, your savings account through a large national chain bank may be something low, such ass 0.2 percent interest. It's something, so you do earn interest, but unless you have tens of thousands of dollars in the account, it will never amount to more than a few pennies. With an exclusively online banking provider, you receive a far higher interest rate. American Express offers a 2.2 percent interest rate. If you had $$$ in your account, you'd make $ in interest, yet if you had a regular bank offering online services, you'd make just $ on the $$$ in your account. And this is every time the interest is compounded. With a monthly compound, you would make $$ more annually just off of interest, and then you'd make money off of the interest you incurred during the previous months.
This kind of interest really adds up. Basically, you need to decide if having a physical location is better for your finances, or if you'd rather have a higher interest rate.
Protecting Your Financial Information
As your information will be accessed over the Internet, you may feel a bit exposed. After all, identity theft is a real problem and you want to do what you can to protect your personal information and make sure others do not access it. You don't need to go to extreme lengths to protect your financial information, but one issue you need to address regarding what is online banking is the ability to safeguard your information.
Secured Internet Connection
When accessing your financial information you need to make sure you're using a secured Internet connection. A secured Internet connection is one that can only be accessed with a password. This means you should not log onto your banking account or conduct personal banking when logged onto an open Internet connection (such as when you're using the Internet at McDonald's or Starbucks). Anyone who is even remotely skilled at siphoning information off of the Internet will be able to see what websites people are visiting when accessing the Internet through an open, non-secure connection.
Don't Save Your Password On Public Computers
Many websites will save your login credentials when accessing the website. First, you should avoid logging onto your banking account when using a public computer (such as a computer at the library). However, there are times where it is not possible to avoid this. If the only way you can access your online account is through a public computer you need to make sure and uncheck all saving options while logging on. You should also make sure the computer is fully logged off before you take your turn on the computer.
Protect Your Mobile Phone
Using your phone to access online banking accounts has become commonplace. However, if you are using your mobile phone for Internet-based banking, you need to protect your mobile phone. If you lose your phone someone who finds the phone can transfer money from your account to theirs (if your phone has the log-in details saved, which it probably does).
There are a few ways you can go about protecting your mobile phone. While the best way to do this is to always know where your phone is and never leave it out of your sight, you should still put up certain safeguards.
First, make sure there is a secure log-in screen option. Most mobile phones now require an eye scan or fingerprint scan. You can also configure this for your mobile app. This way, the only way someone can log into your mobile account is if the fingerprint or eye scan matches.
As with using a laptop, when it comes to what is online banking security protection, you need to avoid logging onto your account through public Wi-Fi. It is safer to perform your mobile banking through either a secured Wi-Fi or even the mobile network.
Online banking is designed to make your banking experience easier. You no longer need to drive across town to perform your banking, nor do you need to head over to the bank after work to get all of your banking done. The more you know about what is online banking and how it can help the easier it will be to protect your information. If you have further questions about online banking, feel free to talk to your current bank for additional information and help with how to use the specific bank's platform.