Online Banking: Pros, Cons and Security Tips

Online banking has become very popular for simple banking operations. These banks can make it a lot easier for you to actively manage your financial life. With an internet bank, you can monitor your accounts, pay bills, and transfer money - all with one click.

However, when considering online banking, keep in mind that internet banking is not always a viable substitute for brick and mortar financial services. To help you decide whether to switch to an online bank, stick with a traditional bank, or choose a combination of both, let's examine the pros and cons of internet banking.

Pros of Online Banking

1. Convenience

Direct banking institutions are open for business wherever there is an internet connection. Aside from times when the site is being serviced, they are always open. Your account balance and information can be called up with just a few keystrokes.

- Even if the internet service is not available, customer service is usually available around the clock by phone.

2. Better prices

Infrastructure and overhead costs are minimal, allowing internet banks to pay higher interest rates on savings accounts while charging lower loan and mortgage rates. There are even accounts with no minimum balance or service fees that can be opened without a minimum deposit.

3. Comprehensive services

Internet banks usually have higher quality websites than traditional banks, with more extensive content. This can include functional budgeting and forecasting tools, online financial planners, investment analysis tools, trading platforms, and loan calculators.

4. Banking on the go

Internet banking today almost always includes mobile functions. New applications are constantly being developed to further expand and improve these possibilities on smartphones and other mobile devices.

5. Transfers.

While traditional banks allow funds to be moved via electronic transfer, there are often fees for doing so. Most internet banks offer unlimited transfers for free. This even includes transfers to outside financial institutions. They also accept authorized direct deposits and withdrawals, such as salary deposits and automatic bill payments.

6. Ease of use

Online accounts are fairly easy to set up and require no more information than a traditional bank account. If you do not want to fill out the application online, the forms can be downloaded and sent by post. Online checks are even easier to use as the payee's information is automatically saved for future use.

Cons of Online Banking

1. Personal relationships

A regular bank offers a better way to develop a personal relationship. These relationships can be helpful when you need a loan or other specialized services. Your local bank manager also has some discretion when it comes to removing an overdraft fee.

2. Transaction Problems

Complicated transactions and large cash transactions can be a challenge with an online bank. Most internet banks do not have their own ATMs, although some have started to form network alliances with traditional banks. But for the most part, using an ATM will cost you something.

3. Available services

Some internet banks may not have the full range of financial services that a traditional bank offers, such as: B. Insurance offers and notarial certification.

4. Security

Internet banks must adhere to the same laws and regulations as a traditional bank, and the FDIC insures the bank accounts. However, electronic access to your accounts always carries some additional risk to your data, regardless of whether you use a traditional bank or an internet bank.

Security Tips for Online Banking:

Below are some tips for increasing security of your online banking experiences:

1. Install the latest anti-virus software

When you connect your computer, phone, or tablet to the internet, you are potentially opening it up to a virus that could steal private information from you. To prevent this from happening, you should install an antivirus program and update it regularly. This includes running full virus scans on a regular basis and downloading any updates provided by the provider.

2. Use a VPN when accessing private information online

A free WiFi network can be very convenient. However, it can also be used by hackers to steal personal and financial information from people using the network. Open WiFi networks are not as secure as private networks, so you should avoid online banking or entering your payment or personal information when using a non-secure network.

When necessary, a VPN (Virtual Private Network) can offer additional protection. VPNs can be used for different purposes. For example, people in China uses VPNs to bypass internet blocking (in Chinese, they call it "翻墙VPN"). VPNs allow you to remotely connect to a private network and encrypt your internet connection and any data you send so that no one can access it - including the internet service provider or a potential hacker. There are many VPNs available. You can check VPN recommendations and reviews to choose a good one.

3. Use a password manager to encrypt and store your passwords

You've probably been told a thousand times to change your password regularly and have a different one for each account you use. However, memorizing eight or nine different passwords (if not more) and changing them regularly can be tedious and time-consuming. Instead, a password manager can do this for you. They are free and generate strong passwords with a combination of letters, numbers and special characters. These are then stored in an encrypted account, and if you are logged into the password manager, your username and password will be automatically filled in when asked.

A reputable password manager gives users the ability to use non-guessable passwords (which are usually not memorable either) for their online accounts. It may seem like you're putting it all on one card, but they have very strong security controls and in fact a good password manager never saves your password, only a super-encrypted version of it that only you can access with the key (the password Manager app and password).

4. Never open suspicious links

Whenever you are contacted by someone you don't know, be it in an email, phone call, text message, social media, or even WhatsApp message, always double-check who the person or company is before clicking any links in the message or provide any of your information.

If there are links or attachments in the message, do not open them until you are sure that the sender is genuine.
Once you know the sender, ask again to make sure they intended to share the link and that it wasn't a virus.

5. Check your credit score regularly

Often times, your credit score is the first place to find out that you've been hacked as all of the loan applications show up here. So it's important to check it regularly and contact the credit bureau if you notice anything strange.

All three major credit bureaus (Experian, Callcredit, and Equifax) offer free fraud victim assistance to limit the burden and inconvenience, including contacting the lenders involved on your behalf. 

Conclusion:

As with everything else, there are advantages and disadvantages to both online and traditional banking. Your ultimate solution could be to use both types of banks. Use the points above to consider your own situation so that you can make an informed decision. Also, once you have decided to use online banking, please use the tips we mentioned above to increase security for your online banking experiences.