Online banking allows you to manage your money via the Internet — when and where you want. You can view all your banking transactions, move money, and pay bills online. In addition, you may find Internet-only accounts that offer the most competitive pricing and returns. As time goes on, Internet banking continues to evolve. You used to just look at your accounts and download information. Then online savings accounts hit the scene with extremely attractive interest rates. Next, banks moved to checking and loans online. Things can only get better and better from here.

The main attraction to online banking has been convenience. You can view your accounts and download information to your computer. Many people have enjoyed using online banks to balance their checkbooks as opposed to doing things the old-fashioned way. In addition, you can have an online bill-pay service write and mail checks for you — or just zap the money to your service providers electronically.

Online Offerings

Another attraction of online banking is competitive pricing. The first Internet bank accounts were savings accounts paying much more than brick-and-mortar banks paid. Some accounts even started offering checks, ATM cards, and bill-pay with these high-yield accounts. Banks continue to offer more every year.

Most large banks offer secure online banking free. You can view your accounts, transfer money, and download data in most cases. Online bill-pay is often free as well, although some banks charge a modest fee (perhaps $6.00 per month) or require you to keep a meaningful balance in your account for free bill-pay services. Some smaller banks offer limited functions only, such as the ability to view your balance and history online. As online banking grows more popular, more banks will add full functionality.

Even if you don't bank online, you may still use technology to make life easy. For example, you can use automatic debits to have payment for one or more of your bills automatically deducted from your checking account each month. To do so, ask your service provider(s) and they'll let you know how it's done. You'll never have to write them a check or mail a bill again! In addition, you might have your paycheck sent directly to your bank account. This direct deposit makes the money available to you sooner, and saves you a few steps.

Staying Safe

Banking online is actually safer than traditional methods of banking. In fact, the U.S. government has been urging social security recipients to get their payments via direct deposit. There are fewer errors when you use technology, and there is less fraud. An electronic system makes it harder for scammers to intercept documents and forge forms. In addition, every transaction can be tracked in detail.

Staying safe online just requires a little common sense. Anything that looks fishy probably is — the Internet is full of scams. However, you can keep yourself from becoming a victim by keeping an eye out for the most common scams.

The most common online scam is the phishing scam. This happens when you receive an e-mail from a “bank” asking you to update your account information. They'll direct you to a Web site, which will ask you for your personal information, bank account numbers, usernames, and passwords. Of course, the site is not really run by any bank. It's simply a way to gather information from people who fall for the scam. How do you avoid becoming a victim? Simply put, ignore these e-mails.

For starters, you can delete any mail that comes from a bank that you don't remember opening an account with. If you happen to have an account with the bank referenced in an e-mail, follow up with the bank directly. Don't just click on a link in the message. Instead, you should call the bank directly, using a number that you know is valid (don't use a phone number provided in the e-mail). If there really is a problem, they'll be able to help you on the phone.

Other attacks involve stealing your information from your computer. Software programs may track your communication or your keystrokes, and send that information off to a scammer. To protect yourself from this type of scam, keep your computer secure. Use antivirus and firewall software, and keep other software (browsers, operating system, etc.) up to date. For the most part, you can avoid problems by avoiding shady Web sites and never opening e-mail attachments from people you don't trust.

Finally, keep a close watch on your bank accounts and keep a tight lid on your banking information. Simply telling somebody your account number can expose you to problems, so don't divulge your banking information over the phone or via the Web unless you know whom you're dealing with. If you suspect that somebody else is using your account, call your bank immediately.

With the Help of Software

The most popular software programs for taking advantage of online banking are Quicken and Microsoft Money. Both are robust personal-finance programs that allow you to download your banking transactions and help to manage your finances, budget, balance your checkbook, pay bills electronically, prepare and file your taxes, track investments, and build a financial plan for your future.