Today, education in money management is incomplete without a deep dive into online banking. According to insiderintelligence.com, 97 percent of millennials use mobile banking applications and 89 percent of all consumers use online banking apps to manage their finances. Learning how banks are leaning into technology to ensure easier and more convenient banking options is tantamount to ensuring positive and efficient banking experiences. Along with developing an understanding of credit scores, learning about the financial tools available to you can help you to develop safe, and sound, financial habits.
Getting Started with Online Banking
As long as you have a bank account and a computer or another device that connects to the internet, you can access online banking. There are a few basic steps to establishing your virtual presence. You'll need to know your account numbers for your credit cards, utilities etc., which can typically be found on their respective statements.
Once you have your account numbers on hand, examine a paper statement or check the back of your credit or debit card to find the bank's website information. Though there are plenty of fraudulent sites out there, banks and credit unions employ formidable security tools to keep your information safe and private. If you visit your bank's website from a cell phone, you'll likely be prompted to download the app, in the interest of efficiency.
The first time you visit the bank's website, you'll be prompted to answer basic security questions and to choose a username and password. You can set up your security features and preferences. The Federal Trade Commission is a federal government agency that you can reach out to for tips on how to create strong passwords.
Benefits of Online Banking
Most transactions that you're likely to engage in can be done remotely, via online banking. Banking websites tend to follow a similar template, which is geared toward a user-friendly, intuitive experience. Once you log in, you're ready to address your personal banking needs. The screen will show you your different accounts, such as checking and savings, and though a banking website is not a financial advisor, they offer many products and services and ways to learn about them.
TD Bank, for instance, offers users loads of information before they even log in. Under their products menu, they list checking, savings, credit cards, debit cards, loans and more. Under their services menu, they list online, mobile and student banking, along with overdraft services and more. At the bottom of the page is a banner where you can review the bank's terms and conditions, security features and privacy features.
You can easily check your account balances online at any time. This allows you to catch errors, such as unauthorized activity, without waiting on a paper statement to be mailed out. You can usually notify the bank through the online banking platform.
ou can transfer funds from your online account. To this point, you can see both beginning and pending balances on your accounts in real-time, so as to make more informed decisions.
Many banks will allow users to set up automatic notifications to better keep track of things. You can keep informed via text, email, or other means. Examples of notifications include:
- Your balance falls below a certain amount
- Your account is in overdrawn
- A large payment is charged
- A direct deposit has been received
Another impressive feature of online banking is that you can use your smartphone camera in tandem with a mobile app to remotely deposit checks. Indeed, remote deposit capture is the epitome of convenience and efficiency.
Protections for Online Banking Users
Early Warning Services LLC is one of many tools available that establishes secure online transactions. This entity seeks to detect and prevent fraud associated with online bank accounts and payment transactions. Even though this agency is always at work trying to stop fraud, our own habits are our number one means of keeping our accounts secure.
You should choose a password with a strong security rating and change it with some frequency. You should never share your password with any third-party providers. When you provide both a mobile number and an email address to your bank, you allow them to apply another layer of security. If, for instance, you try to log in several times, without success, the website will recognize this and refuse to open until you enter a code that's been automatically sent out to you.
Though banks strive to offer excellent customer service, they know that banking and financial literacy are as important to their customers' experience as anything on the website.
Credit Cards vs. Debit Cards
Learning the difference between credit cards and debit cards is only as important as your ability to recognize when to use one versus the other in a given situation. You will likely receive a debit card when you open a bank account to access your money. The major difference between a debit vs a credit card, is that debit card transactions don't involve borrowing money; the money that you're spending is already in your checking account. If the funds are not there, the cards will likely be denied due to insufficient funds, though some banks have overdraft protections in place that will allow transactions to be completed. You may be charged an overdraft fee if this occurs.
Credit cards, on the other hand, do not dip into your checking account. The bank makes the purchase for you, and you pay them back over so many payments, with interest. If you are late with payments, you will be penalized. To obtain a credit card, you need to apply for one and whether or not you receive it will depend greatly on your credit score.
Developing a Credit Score
One thing that people have in common is that we all have credit scores. Credit scores are the numerical formula that predicts how likely you are to pay back a loan on time and they're used by lenders to determine if they'll allow you to borrow money from them and at what interest rate. The better the score, the more willing lenders will be to extend credit and/or a low-interest rate. On the other hand, folks with poor credit scores will struggle to obtain loans and acquire them only with high-interest rates.
Managing your credit is as important as learning the ins and outs of online banking because your credit score can be the difference between obtaining a loan for a vehicle, home or some other big purchase or being denied. Lenders will use a variety of methods to determine your creditworthiness, a widely used method is to look at your FICO® score. Making payments on time and carrying a manageable amount of credit are two big factors that determine your FICO® credit score, which ranges from 300 to 850, or from poor to excellent:
- 300-629 - Poor
- 630-689 - Fair
- 690-739 - Good
- 740-799 - Very good
- 800-850 - Excellent
Developing a sound understanding of online banking is important as banks will continue utilizing technology more and more when it comes to creating more digital banking options. It is especially important for young people to recognize, and build upon, their financial status.
