Money tip #29 – Bank online

As I’ve said before this blog aims to appeal to help everyone with their finances – from financial novices to the more experienced.

So I thought that Today’s money tip should be relevant to everyone who has decided to take charge of their finances. To me it is a fundamental building block, or foundation, on which all personal finances should be built……and that is the use of internet banking.

It may seem surprising but a recent survey showed that the number of users now banking online has only just exceeded 50% for the first time. When you consider that 70% of households had internet access in 2009 clearly even those who could do not always bank online.

So what are the benefits of banking online?

By banking online you can:

• Check your bank balance
• Check and print off your bank statements
• Look at historical statements going back a number of years
• Pay bills
• Set up/cancel direct debits and standing orders on your bank account
• Transfer money or make on-off payments to people/companies/or other bank accounts
• Order foreign currency and other services from your bank

In short, banking online enables you to monitor and control your bank account and therefore your finances. By monitoring your account online you will:

• Notice any erroneous transactions sooner and have them investigated (which could save you both time and money further down the road)
• Avoid late bill payments – which will reduce the likelihood of both fines and damage to your credit rating
• Budget better which should help curb excessive spending
• Stop paper statements being sent to you in the post – they are redundant when you can check and print them off online. This also stops the deluge of post you need to sort and reduces the chance of ID theft from someone intercepting your mail

A lot of the personal finance tips or advice in this blog are made easier when you use online banking. For example you can accurately work out your monthly outgoings (bills etc) and take action accordingly. Personally I couldn’t do without it. I check my accounts every day or so just to make sure everything is in order.

So if it’s so good why isn't everyone doing it?

Good question. Most banks offer online banking but it will require a little effort initially to set up by registering online or by phone. But assuming that people have internet access their inertia can usually be put down to them being afraid of the unknown/change or security concerns. If people don’t want to change then fine, but why make life more difficult than it needs to be. It’s like riding a horse and cart compared to driving a car. But as for security, banks are spending millions ensuring their sites are secure as it’s in their own interest. This doesn’t mean that you will never be the victim of ID theft or some other criminal activity but this link gives you handy advice on how to minimise the chances when banking online. But, in any event, whenever you are transmitting personal data you are putting yourself at risk and that includes via the post – and I don’t recall Royal Mail taking measures to improve their security.

But why stop with just running your bank account online. You can also run your credit card and loan accounts online.