Online banking, now accessible from any mobile device, helps people be more aware of their spending and bank account data. With online banking, it's much easier to prevent and detect fraud, manage your budget and ensure bill payments are received by the correct institution.
Transaction and Fraud Awareness
Most, if not all financial institutions now offer customers the ability to sign up for an online banking account. There are even some financial institutions that operate solely online. This makes it much easier to track your spending and manage your budget.
"People may find that online banking makes sticking to a budget easier because you can easily sort payments to see how much was paid to specific budget categories . and [it] allows you to compare spent amounts with budgeted amounts - so your budget resembles your real life as closely as possible," wrote Investopedia contributor Ryan Barnes.
In fact, with online banking, you can stay up to date with your transactions and account balance almost in real time. It's important to note that the balance and data listed on your online account statement may not be precisely accurate, as transactions could be pending or larger amounts than what you've purchased could be posted, such as with gas station purchases or hotel reservations.
However, Barnes reported that "some personal finance software programs (such as Quicken) can be linked directly to your online accounts to provide real-time analysis of all your balances and cash flows." There are also money management apps, like Mint, that can sync with your online accounts to provide real-time information.
This is especially important in safeguarding against fraud. Some financial experts recommend checking your accounts and balances daily so you can quickly catch identity theft. If a fraudulent charge is made or money is withdrawn from your account without your authorization, you will be able to resolve the issue quickly, before more damage can be done.
Overdraft Fees and Bill Pay
Being able to track your account data also helps you protect yourself (and your money) from overdraft fees from the financial institution.
"If you sign up for online alerts with your [financial institution], you will receive an email when your checking account balance dips below a certain limit, say $50 or $100," Lucy Lazarony, Credit.com contributor, wrote in an April 2014 article. Then you can make sure to transfer or deposit money into the account to avoid the penalty, which is $20 to $35 for most institutions.
Online banking also helps automate bill payments to help you ensure that your bills are paid on time and that they go to the correct person or business.
"You can have the payment go out on pre-determined dates (as in every month on the 15th) or simply log into your account each month and manually trigger the charges to your accounts. Either way, there is no postage to pay-and you can see the effect on your account balances immediately," said Barnes.
With online banking, you will not only be more likely to think about what you're buying but also be more aware of your transaction history, allowing you to catch and prevent identity theft and stay within your planned budget.