Online Banking - is it for you?

Managing Your Personal Finance

Keeping a handle on your personal finances can make the difference between an easy-going life and one filled with worry. It is amazing how much stress you can mitigate by keeping tabs on outgoings and having regular updates on your finances.

Thankfully modern banking leaves you able to go about your day knowing that a detailed log of your personal spending is available at a moment’s notice.

The Basics of Online Banking

Almost all banks now offer some level of online banking support and as the technology improves, they are quick to make updates to improve their facilities. Having banking set up on your home computer, laptop or phone gives you instant access to your balance and transaction history as well as allowing you to transfer money, manage direct debits, apply for a loan and more.

Online banking allows you to do almost everything yourself that previously you would have to queue in a branch to achieve. Short of spitting out large wads of cash, there’s little you can do in a branch that you can’t now do from the comfort of your own home.

Setting Up Online Banking

Though the process of setting up online banking is different for each institution, the basic steps are the same:

1 – Have a Bank Account

It may sound obvious, but the first step to any online banking involves having a bank account. Thankfully, these too can now be obtained online. Choose your bank, visit their website and apply for an account online. After a few forms, your bank account request is assessed and usually done within hours. Paperwork is sent to your home and you can be up and running a few days later – without ever leaving your seat.

Having multiple accounts is also worthwhile, allowing you to better manage your finances and take advantage of different banks rates and offers.

2 – Activate Online Banking

The process for this differs greatly across banks. For some, online banking is automatically activated once your account is set up, for others you will need to make a phone call and set up security, a few more need you to insert your card into a special reader (which they will send you) to prove your initial identity.

Whatever the process, your bank will have clearly detailed this when you opened the account and will be quick to help you if you need by either checking on their website, giving them a call or (if you can) popping into a branch.

3 – Log-In for the First Time

Once it is all set up, you need to log in and get acquainted with your new tools. Online banking can seem daunting the first time you look at it, so it pays to give yourself half an hour or more to get settled.

Take a look around so that you know how to view and print your statements, list your direct debits and standing orders, make a payment or transfer money from one account to another.

Feeling comfortable with your online banking is important if you are going to get the most out of it.

4 – Download the App

Most online banking has an app with many of the features of the main online site. If you have a smartphone, it is always worth downloading the app to go with it.

For an in-detail look at mobile banking apps, read our article here. [Liv – link to the other article!]

5 – Set-Up Alerts

Some of the online banking systems allow you to set alerts, either as an email or text message to your phone, letting you know when you are low on money or other activity. Setting up the alerts to suit you will help you keep your finances in check and help avoid unnecessary charges when things go wrong.

Making the Most Use of Online Banking

There’s no doubt that online banking can help you manage your finances and avoid bank charges, but only if it is used to do so. There’s little to be gained by setting up your online services and then forgetting about them!

Check your online accounts regularly – this may be every morning, or just once every few days depending on how often you make transactions.

• Check your balance – if you are low on available funds, see if you can move some money around to bump it up, or simply slow down on spending!

• Check the transactions – is everything there you expect to see? Do you know something is yet to come out and needs to be taken into account?

• Check your regular payments – keep an eye on your direct debits and standing orders to know what is coming out soon.

• Plan your spending – think about what you need to use your money for and don’t waste it unnecessarily.

By keeping a regular eye on your finances, you will be able to stop before you make an unnecessary purchase that you can ill-afford.

The timing of transactions

Not every transaction is immediate. Though many banking transfers are made within minutes, or even seconds, some may take a couple of days between using your card and it appearing on your account. One example of this is a card payment at a ‘pay at pump’ petrol station, which can take two days to show.

When checking your transaction history, make sure you think about any purchases which have happened over the previous few days and if they are not showing, mentally deduct them from your available funds.

If you are low on money, it may be tempting to “double-spend”, taking advantage of the delay by spending money that you know has been already been used and allocated elsewhere. While this may seem like a reasonable money-juggle, it rarely is and should definitely be resisted to avoid bank charges.

If it’s all going wrong

If you check your balance only to find you have less money than you expected, or you have gone further into the red than your account allows, don’t hide your head in the sand – do something about it right away:

• Can you transfer money from another account? – If you can move money from another account to bring the balance of this one up to where it needs to be, do that immediately.

• Can you ask for help? – If you don’t have the money yourself, is there someone you can ask to bail you out? It is far better to reach out to a family member or friend than to fall into unexpected debt.

• Contact the bank – If you cannot otherwise sort the issue, contact the bank immediately. They may be able to help you by increasing an overdraft or just waiving any charges associated with the problem, and even if they can’t, the record that you contacted them can help later on.

Remember, it will harm your credit rating if you are often charged for bounced direct debits or other missed transactions – it could end up costing tens of pounds per month. Try to plan ahead and avoid horrible surprises.

The Security of Online Banking

One of the concerns that many people have regarding online banking is the idea of being hacked and having their money taken from them.

In reality, the security of online banking is extremely high and the chances of your bank details being used against you is very low. Most financial losses due to online banking occur because of a fault with the user. You can mitigate any risks by being sensible:

1. Choose passwords and PINs that are difficult to guess, but easy for you to remember.
2. Never pass your password or PIN information to another person.
3. Don’t write passwords or PINs in any easy to read form.
4. Don’t send passwords or PINs in a text or online message.
5. Be aware of your bank’s security questions and only answer those if asked for security checks over the phone. Banks will usually only ask for one or two letters from a password, rather than the entire password itself to increase security.
6. Never believe anyone contacting you who claims to be from the bank and asks for any security details. You should take their name and then offer to call them back on a known number – don’t just accept a number they give you and instead call a standard number for your bank as detailed on their website.
7. Never reply to an email with your bank details.
8. Never follow a link from an email asking for your bank details.
9. Google any phone number or email address you are unsure of – plenty of websites have detailed checks on fake numbers and fraudulent email addresses and will show up on a simple search.

One other problem that occurs is that of transferring money to an incorrect account – thus losing it forever. Remember, the bank only cares about sort code and account number – the account name is never checked. Just because you write ‘Suzi Smith’ in the account name, it doesn’t mean Suzi is getting the money.

Triple check account numbers and sort codes to make sure you are sending to the right place. Similarly, always triple check your own account number and sort code when you are giving someone trusted your account details – having your salary paid to a stranger and knowing you can never get it back, hurts.

Online banking security is not something that should ever worry you as a user. The systems are well-developed and have been successfully used by hundreds of thousands of people. If you keep your details secure, so will the bank!

Further Information

Here at Compare UK Quotes, we have a huge library of articles to help you maintain a positive level of personal finance – for more information on online banking, read our article on banking apps.

The world of tech is ever-evolving and there are now mobile-only banks (challenger banks) such as Monzo and Starling, which are solely smartphone app-based and are really challenging the future of banking in the UK.