ASK MR. MODEM

Why Do Women Like

Online Banking So Much?

Could It Be Because It Saves You Time and Money? Hurry. The Line

Forms at Your Computer!

By Richard A. Sherman

re you tired of long lines, inconvenient hours, high fees, and low yields at your local bank? If so, you may want to explore the world of Internet banking. In the U.S. today, 25 percent of all households utilize some form of online banking. By 2010, more than 50 million U.S. households will be banking and paying bills by clicking a mouse instead of licking a stamp. Online bill paying has struck a particularly resonant chord with women, who—according to Wachovia Securities—are the bill-payers in 80 percent of all households and account for more than half of the customer base for bill-paying services.

            It’s no wonder they’re so popular with busy women, juggling career and family: Unlike your neighborhood bank, online banks never close, so there are no pesky "banker's hours" to contend with. They are accessible 24 hours a day, seven days a week, and are located a quick mouse-click away.

            Today, most banks and credit unions offer some form of online banking. Typical services permit you to monitor accounts, balance check books, pay bills, apply for loans, transfer funds from one account to another, review credit-card charges, shift money between your checking and savings accounts, and transfer funds to someone else's account (to a child in college, for instance), all without leaving the comfort of your home.

Banking from Home

            There are two types of online banks. The first is a traditional bank, which has an online presence. In addition to maintaining bricks-and-mortar branch offices complete with semi-cheerful tellers and ATMs, these banks allow you to access your accounts from your home computer. Some let you perform only basic tasks such as checking your current balance; others permit you to do just about everything you can do in person at the bank—except use the drive-through window.

            ING DIRECT is an example of the second type of online bank. These Internet-only banks have no physical presence—no branch offices, no ATMs, no tellers, and no snoozing security guards. Because of their low overhead, online-only banks typically charge less for services and pay higher interest rates than regular banks do. Deposits are made by mail or by transferring funds electronically from another account. To withdraw cash, the bad news is that you'll need to visit another bank's ATM. The good news is that most Internet-only banks credit any service charges incurred, though you may have to submit your ATM receipt to get it. 

            Online banks offer Web-based features, including the ability to view multiple accounts, obtain stock quotes, receive rate alerts by e-mail, and use portfolio-management programs to help monitor your holdings. Most are compatible with popular software such as Intuit's Quicken (www.intuit.com) and Microsoft Money (www.Microsoft.com), so your accounts and related information can be downloaded into your home computer.

Internet Bill-Paying Services

            In addition to bill-paying services offered by most online banks, there are also Internet-based companies that provide a full range of services to eliminate check writing, postage, and mailing payments. Popular services include www.checkfree.com, www.paytrust.com, and www.statusfactory.com. Even the U.S Postal Service has entered the online bill-paying arena at www.usps.com/paymentservices/.  

            For approximately the same prices as banks charge, basic Internet bill-paying services permit users to pay bills that arrive via "snail mail," using their online accounts. A basic check-paying service usually includes the payment of 25 to 30 bills a month for no charge or a fee up to $10 a month. Most bill-payment sites include a payment activity page that lists all your payments and their status: scheduled, pending or processed.

            Here's how bill-paying services generally work: You forward your bills (or have them sent directly) to the service. The service scans each bill and sends you an e-mail notice when the bills are accessible online for your review. The service then withdraws the money from your account and sends it (electronically, if possible) to the creditor. If the creditor does not accept electronic payment, the service will debit your account and pay by check. 

          Setting up this type of service is as simple as typing in a series of creditors' names, account numbers, the amounts and dates they are to be paid, and whether a payment is a one-time payment or should be paid automatically every month. Using them is a foolproof way of avoiding late-payment fees on your credit card bills..

Read the Fine Print

            The online service agreement is the single most important item to investigate before signing up. When evaluating an online bank or bill-paying service, be sure to review these issues:

            1. Privacy: How is your data protected?  Who has access to your account information? Are you insured against the unauthorized use of your financial or related personal information? It's important to understand the service's privacy policy and whether your personal information can be used or shared with others.

            2. Conflict Resolution. If a payment does not get credited to an account or is incorrectly credited; or if you cannot gain access to your account because of a technical snafu at the provider's end of the modem, does the service pay any penalties incurred? If so, what are the parameters?

            3. Support Services. How accessible and responsive is customer service or technical support? Is support available by telephone, e-mail, or both?  Send a test inquiry and note the level of responsiveness. A 24-hour, toll-free telephone number should be available, so that you always have direct access to a "live body."

            4. Insurance.  Is your online bank insured by the Federal Deposit Insurance Corporation? Check to see if they’re listed on www.fdic.gov to be sure, or call 800-934-3342.

            5. Fees.  Before you sign up, review the fee schedule for online banking and bill-paying services and make sure you understand it. If you have any questions, get clarification before you establish your account. 

           When shopping for an online bank or bill-paying service, start by investigating what services your current bank has to offer, then compare your findings with other banks. Put the Internet to work for you by visiting BankSITE (www.banksite.com), a directory of online banks that includes handy interactive self-tests and tools to help you make informed decisions about online banking products and services.   

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Richard A. Sherman, a k a Mr. Modem, is a nationally syndicated columnist, whose “Ask Mr. Modem!” column appears in more than 60 publications throughout the U.S. and in Canada. As publisher of the popular “Ask Mr. Modem” weekly newsletter, he provides easy-to-understand, non-technical, computer- and Internet-related answers to questions received from subscribers worldwide. He is the author of eight books, including “Mr. Modem’s Internet Guide for Seniors” (Sybex) and “Ask Mr. Modem,” a collection of hundreds of frequently asked computer and Internet questions received from readers. Richard is a contributing editor to TechTV and host of the daily "Mr. Modem Minute" television segment produced

by FOX-TV.

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