Tips for Making Online Banking Work for You

November 24, 2010

Chances are you’ve seen advertisements in magazines or on the internet for online banks, touting the high rates that they pay on savings accounts and perhaps also the low rates they charge for mortgage loans along with the convenience and time savings associated with paying your bills online.

Many people have found that online banking can be an important part of their financial strategy. If you haven’t set up an account with an online bank, there are several points that you should consider to make sure that you find the best bank for your needs and goals. If you already have an online bank account, you can use these same tips to make your account work optimally for you. Here is some advice to consider:

  • Easy access. First, make sure you have convenient access to the money in your account. At a minimum, you should be able to transfer money into and out of your account at no charge via electronic transfer. In addition, if you want more immediate access to your money, make sure your bank provides access to your account via a nationwide ATM network. Also check to see if the online bank will credit your account or rebate any ATM fees that you incur using ATMs outside of the network.
  • Online bill pay. Second, take full advantage of the online bank’s bill paying features. In addition to the standard bill paying features, some online banks have a bill pay function that will automatically generate a paper check and send it to the payee, which can be very convenient if some of your bill payees don’t have an electronic pay option.
  • Financial services. In addition, you’ll want to investigate other financial services options that may be available from the online bank. Some banks also offer investment management and custodial services (either directly through the bank or through a partner company). Often times the fees that the banks charge for stock trading and other activities are much lower than you could find from a traditional services provider.
  • FDIC Insured? Further, make sure the bank has FDIC insurance that will cover the full extent of your account balances. Nearly all of the online banks that you’re likely to be looking at will have it, but there are a few institutions out there that do not.
  • Reputation and standing. Finally, do some research to find out how long the online bank has been in business. As long as the bank has FDIC insurance you are not at risk of losing your deposits (up to FDIC limits) if the bank must close or otherwise has operational problems, but sometimes the closing process can tie up your money and make it difficult to access for a short period of time. You can take some comfort if the bank has been operating for a number of years, or if it is affiliated with a larger, “bricks and mortar” financial institution.
  • Online banking can help you gain more control over your finances. It can simplify your life. Learn all the services and features your online bank offers. Take advantage of the ones that make the most sense for your lifestyle and financial goals.

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