Are You Getting the Most Out of Online Banking?
Online banking is booming. Between 2000 and 2010, the number of households that use online banking increased more than six-fold, and the number that use online bill payment increased nearly eight-fold, according to a 2010 survey by Fiserv. Eighty percent of all households with Internet access use online banking. Those findings line up with an August 2011 survey conducted by the American Bankers association, when 62% of consumers said they prefer banking online compared to other (more traditional) banking methods, up from 36% in 2010. That same survey showed that 57% of bank customers 55 and older prefer banking online compared to 20% in 2010.
With the changing of the guard from traditional to online banking, there’s plenty of ways for things to go awry. To make your online banking adventure a good one, here’s what you need to know.
Confirm the online bank is legitimate
When you're shopping around for your online bank, make sure you choose a legitimate one that is FDIC insured with an office in the U.S. Check out the "About Us" page on their website to find out about the bank's history and physical address. Ask around and visit legitimate websites that review online banking institutions. Verify that the bank is FDIC insured by checking the FDIC Bank Find website. Also, when typing the bank URL into your browser, make sure you enter it correctly. There are copycat bank websites out there that masquerade as the official website but are just ploys to steal your financial data, warns Erik Larsen, president of NextAdvisor.com, which offers independent research on financial services and products.
Read the fine print
Before signing on for anything, read all terms and conditions. Banks can hide "hidden fees" in the fine print. For example, you may be charged for exceeding a certain number of withdrawals per month or for using an out-of-network ATM. These fees can add up and cost you upwards of an extra $20 - $30 per month. Do your research ahead of time and save yourself some money in the long run.
Do a little due diligence
Ask your social network. People usually have strong opinions about their financial institution - either positively or negatively. Throw a question out to your Facebook friends or Twitter followers - specifically those in your geographic area - and see what comes back. Know too, that unless your bank has a Security Guarantee, you may not be protected in case you are a victim of online fraud, says Chris Clausen, vice president with Wells Fargo Fraud Prevention and Authentication, with the Internet Services Group.
Come up with a safe password
You’ve heard it before, but don’t use your birthdate, pet's name, or other easy-to-guess information for your password. It should contain upper and lower case letters, numbers and characters. Come up with a unique password. For example, if you want to use "Ranger" try something like "r@Ng#r" instead. If your password is easy for you, it's just as easy for thieves to login and transfer your hard-earned money out of your bank account, says Larson.
Be wary of public or un-encrypted wireless internet
Never use a public internet connection to login to your bank account. Most public Wi-Fi is unencrypted, which makes it easy for thieves to discover your login and password. This means no checking your account balance on your computer while surfing the web at Starbucks. Also be sure your home wireless router is encrypted. Yes, technology exists that enables thieves to intercept transmissions from your house if your connection is not encrypted. Invest in an encrypted router and use it. Or, connect your computer directly into your router with an Ethernet cable the old-fashion way.
Protect your devices
If your computer doesn't have the most recent anti-virus protection you can be at risk when you're accessing your bank accounts online. There are virus, malware and keystroke logging programs out there that once downloaded to your computer can invade your privacy and even log exactly what you're typing (ie, login and passwords). Update your protection. If you’re using a mobile banking app, keep your smartphone or tablet as safe as your computer.
Go for the cutting edge
If you want a bank that will keep you on or near the edge of online banking innovation over the long haul, there are a couple of criteria to consider.
Look for personal financial management (PFM) tools that are an integrated part of online banking. Many leading banks already offer online PFM tools or will offer them soon, says Daniel Steere, Director of Consumer Insights, Fiserv.
He’s also big on comprehensive payment options. You want to be able to pay bills, pay people, and transfer money quickly and easily all from within the online banking site.
Make sure you take advantage of the latest and greatest. The online space changes rapidly. Already it’s not your father’s online banking.