Today’s technology subject is online banking. Are you excited? Or did your eyes just glaze over? Well, I’m really excited to talk about online banking because it has saved my sorry a** more times than I can count. It can have some challenges too . . . but overall, it’s a life changer.
So, it’s hard for me to imagine people who have not already embraced online banking, but I know that they are out there. I recently worked with a woman who did not pay any bills on line because her husband was strongly against it. I don’t know exactly what his objections were, I think it had to do with the potential of identity theft, but whatever it was, I can assure you that online banking is very safe (and I’ll get into that in more detail), and it will save you time and money due to the convenience and accuracy of payments.
I actually started using an online bill payment service WAY back in 1992 using something called “Checkfree”. It was a PC application that connected to a database by way of a modem connection. Although the technology has advanced quite a bit, the functionality hasn’t changed much at all. You set up an account you want to pay out of, you set up your payees, you schedule payments, and payments are made – either electronically if the vendor has the capability, or by check if they do not. The major difference is the data is recorded instantaneously vs. by a download and batch process.
Checkfree’s personal division was bought by Quicken Financial, and Quicken provides both a client for your personal computer, or you can use the bill-paying service via the internet. I pay $9.95 a month for the “privilege” of Quicken keeping track of my Of course, you don’t have to use a bill-paying service at all – most, if not all, banks and credit unions offer bill paying services for FREE.
I’m going to tell you all about the service and features, but I’ve taken too long to tell you all about why you should do this – what is in it for you for using on-line banking and bill paying:
- No more late bills, fees, etc. – so, if you are like I am, then even when you have the money to pay your bills, you’ve inadvertently missed a payment date causing you to incur a late fee. It’s embarrassing, and it can go on your credit report causing you grief when you go to get financing. lenders DO NOT want to hear that you “forgot” or “lost the bill” – they rather hear that you were in a dispute about the amount then you were just not responsible. This is definitely my #1 reason to use a bill paying service – no more missed payments!
- Save time. I’m the finances person in my house, and keeping track of all the bills, statements, and paying the bills sucks up a lot of time. You can set up recurring payments for ~80% of your bills. Mortgage? Cable? Phone? Electric? All of those monthly bills can be scheduled to be paid without you even opening an envelope. No more worrying, “Crap – today’s the 2nd of the month, and I didn’t get the mortgage payment in the mail.” It’s done, it’s (most likely) been an electronic entry sent from one bank to another.
- Save money. I already mentioned the money you would be saving on late fees and finance charges, but even if you pay every bill on time without incident today, you are still spending money on 1) checks, 2) stamps, and 3) envelopes. If you pay 20 bills a month, that’s $9.80 in postage in today’s rates. One box of checks costs ~$25 (including shipping) for the most basic design. You’ll still need checks, but a lot less of them.
- Improved recordkeeping. I used to religiously balance my checkbook and look at every bill and payment – when I was single and had nothing better to do. Once I made enough income to know that I wouldn’t bounce a check, I stopped balancing it. It wasn’t long after that when I switched to online bill paying, and I have the back up of this other company ensuring that my payments are where they should be. I can log onto my banking website to check every transaction. They are incredibly accurate.
- No more getting to the bank during banking hours. I am at work the same hours my bank is open – except for one evening when they are open until 7 PM – which is never convenient for me. Of course, if you transitioned to ATMs like the rest of civilization, you probably get your cash there. Maybe you even deposit your checks? I question that because most people I know still go to the bank to deposit. I started depositing my checks (gift checks, rebates from vendors, the occasional payment from someone who didn’t have cash on them) via ATM many years ago, but my family all jokes about my notorious procrastinating on cashing checks. I have had many go stale dated. Enter MOBILE DEPOSIT! Oh greatest thing since sliced bread – simply take a picture of the front and back of the check, and deposit it via your phone!!! Also, you can transfer money from one account to another online (or on your phone). I may never have to set foot in a bank again.
- It’s Green. Ok, so technically this isn’t what’s in it for you, but maybe what’s in it for your children or grandchildren. Using online banking can reduce the amount of paper and gas we use. Once you have your online banking set up, the next step is to go to online statements. Same with your bills. No more trips to the bank means less gas you use. Think about it, you could reduce your carbon footprint.
So, have I convinced you to sign up for online banking? Go ahead, open another browser window right now! Ok, maybe I can answer some questions you may have.
Why do I use (and pay for) a bill pay service rather than use my bank?
Quicken Bill Pay offers some features that aren’t available on most free bank bill pay applications – for example, I can set up payees to send statements, and set up rules for those bills to be paid automatically. This takes care of all the monthly payments when you don’t know what the amount is going to be – I can set up my credit card bill, for example, to be paid in full on the due date if it’s less than $1k, but email me if it’s more. The notifications are also more robust. Finally, but probably most importantly, the bill pay service is account agnostic. If I decide to leave my current bank and open a new account, I can just change it in the bill pay service and not lose all the payees that I’ve set up. That said – I have only changed my bank account one time since I started using it.
Can’t I get the same benefits by setting up automatic payments with my vendors?
Yes, many vendors now offer the ability for you to set up electronic payments with them. This involves giving them your checking account info and bank routing number, and authorizing them to take the money you owe. First, this means trusting your account info with a bunch of vendors where with bank bill pay, you are entrusting the vendor information with a bank. Hmm, which one makes you feel more secure? Plus, it’s one and done with the bank bill pay, but this has to be done over and over again with each vendor. If you decide to change your checking account, you’ll have to do it all over again with each payee. I also never liked the idea that the vendor could come in and take the payment – I want to be in control of what I pay. What if I have a dispute? What if I can’t pay the full amount and want to spread payments out?
What about security and identity theft?
Yes, it’s a shame that we have to worry about these things, and honestly, it can happen. But, you should not lose sleep over the possibility that someone could get a hold of your data this way. If you have a credit card, you already have a vulnerability. Although, I knew someone who had their identity stolen from a list RMV – they had no credit cards at all, and had almost no online presence. So even if you have a car you have a vulnerability. The important thing to remember is to be watchful – if you see suspicious activity, you should report it right away. The banks and credit card companies all have insurance to cover fraud and identity theft, and while it is admittedly a horrible violation and an extreme nuisance to resolve, you will be protected.
What are your favorite things about on-line banking?
By far, my favorite are the phone aps. I love that I can be sitting and waiting (I spend a lot of time in waiting rooms), and as long as I have a signal, I can be checking my balance, depositing a check (*love* the mobile deposit), or transferring money. I can even use the bank’s bill pay from my phone!
Trust me on this one – if you are naturally disorganized, online banking is one of those “must haves”. It will change your life!
