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Managing your finances online

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August 1, 2008 Back to Article

Summary Do you manage your finances online? Millions of us do. We pay our bills online, manage our bank accounts and investments, as well as monitor our credit card expenditures and balances. We do it online not just because we can save time, hassle and postage, but because we can better monitor and control our finances. While we enjoy those benefits, we have the nagging question – Is it safe? Let’s take a look at both the benefits and the security concerns.

Online banking

Virtually all banks allow you to bank online. The biggest benefits to you are access and monitoring. When you bank online, you have access to your accounts all the time, not just during banking hours. Here are just a few of the things you can do:

Monitor your accounts, check your balance and verify each transaction anytime, not just once a month when your statement arrives.
Transfer funds from one account to another without making a trip to the bank or the ATM.
Pay bills online, anytime.
Choose whether to receive a paper statement at the end of the month or to view your statement online.
And many banks extend online banking to your PDA, so you can monitor your accounts or make transactions while you’re away from your PC.

To get started, either talk to your bank or visit its Web site. You can set up online account access by providing your personal information, account number or numbers, and selecting a user name and password. You’ll get an instant email or phone call so that you can verify that it was you who set up the online account.

Online bill paying

These days, most banks enable, even encourage, you to pay your bills online. Similarly, most companies you do business with – credit card companies, merchants, utilities, gas companies and so on, also encourage online bill paying. Everyone in the process – you, your bank, and your creditors – saves postage, paper, and labor. There are two basic varieties of online banking.

The first is easier to set up, but requires that you go to each creditor’s website to pay your bill each month. Here are general instructions on how to set it up:

Sign up online with your bank (see above).
Sign up on your creditor’s Web site.
Provide your bank account number and the bank routing number (both are on your checks).
Create a user name and a password.
Choose to have the payments made automatically or to make each one yourself.
Choose whether to receive your bill online or via snail mail.

The second requires more set up and, in some cases, you’ll have to pay a fee. The benefit is it enables you to pay all your bills in one place – on your bank’s Web site or via the Web site of a third-party online bill-paying service. Here’s how it usually works:

Sign up online with your bank. If your bank doesn’t provide this service, sign up with a bill-paying service (some are free).
Provide the name and address of each creditor and your account number.
Each month when you’re ready to pay your bills, go to the bank or third party Web site and enter the amounts you want to pay each creditor, and checks or electronic transfers will pay the bills.
Check with each creditor before you set this up, because they may have specific instructions on where or how to send their payments.

Managing Investments

How’s your investment portfolio doing today? Well, you could call your broker and ask. Or wait until the end of the month and check your statement. Or go online and take a look right now. You can ask your broker to set up online access for you, or you can go online and sign up yourself. The process is very similar to signing up for online banking (above). Once online you can:

Monitor the total value of your portfolio or check the current price of each security
View trends for the whole portfolio or individual securities
Buy and sell securities (Be sure that before you do this, get input or recommendations from a licensed broker or, at the very least, do some astute research of your own.)

Monitoring your credit cards

According to the FBI, credit card fraud is the most common form of consumer fraud. Online monitoring of your credit card transactions can help keep you from becoming a fraud victim and a statistic.

Go to your credit card company’s Web site and sign up for online access to your account
Monitor your account frequently and identify each transaction.
If you see a transaction that is suspicious, call the credit card company and report it.
If the transaction is found to be fraudulent, you can have the charge reversed, freeze your account and have a new card issued.

Financial software and online finance

Popular personal financial software, such as Intuit Quicken® or Microsoft® Money, can be configured to work with most online financial activities, so that all your online banking, bill paying, and investment management can be accessed and accounted for in one location.

Security consideration

Is all this safe? Well, nothing is absolutely safe, but you can take precautions to make sure that your online financial management activities are at least as safe as the same activities would be in the offline world, maybe even safer. You should be aware, vigilant, and take routine precautions such as these:

Make sure the Web sites with which you transact financial business are secure. Look for the lock icon and/or a Web address that starts with https:// (the “s” stands for secure). This isn’t a guarantee but generally a good indication of a secure site.
Create strong passwords of at least 8 characters that combine letters, numbers, and symbols. Use a different password for each account and don’t use the same password that you use to access your PC. Change your passwords frequently and don’t store them on or near your computer.
Secure your PC with Internet security software, such as Norton 360 ™ or Norton Internet Security ™. Keep that software updated.
Don’t respond to emails or pop-up windows that ask you to update your security information. Your bank, credit card, or investment firm won’t ask you to do that.
Remember, any offer that seems to good to be true probably is. Don’t respond.
Consider signing up with an online credit-reporting agency, such as Equifax, Transunion, or Experian, to review your credit history and receive alerts when something unusual occurs to your credit.

The bottom line

So long as you do everything you reasonably can to secure your PC and take standard precautions in making online transactions, the benefits of managing your finances online will outweigh safety concerns. Say goodbye to paper bills, stamps, and envelope licking. Say hello to the easy way to manage your finances (but please be careful).