Internet Banking with Virtual Banks

There are two ways to do internet banking.  Banking online through a website set up by a traditional bank does not seem to be too much of a stretch for many people.  However, virtual banks are taking internet banking to a whole different level.

A virtual bank is a bank that has no physical structure where you can go to conduct business.  It has no branches convenient to you.  You simply do all your transactions through the internet banking.

If you have a problem, you cannot go to your local branch and complain to the manager.  Instead, you have to contact representatives of your virtual bank online.  Sometimes, you can take care of these internet banking tasks over the telephone.  If you like to deal with problems face to face, though, virtual banks are not for you.

A virtual bank does not have automatic teller machines.  It usually charges you fees to use other banks’ ATM’s.  There are some virtual banks that will reimburse you for ATM fees.  This is an important thing to consider when you are comparing internet banking.

If you use ATM’s a lot, you will not want to pay extra every time you use one.  It matters especially with a virtual bank.  If you do internet banking with one, it will be the way you usually get cash.  If not, you will have to transfer funds from your virtual bank to a traditional bank account and then get the cash from that bank.

Deposits are done differently at virtual banks.  When you are doing strictly internet banking, there is no one to cash checks for you.  You can have steady income amounts automatically deposited into your internet banking account.

However, someone will eventually buy something from you, or you will get a rebate check.  At that point you will need to make a manual deposit.  Some virtual banks now have set up deals where you can make deposits to internet banking accounts through certain ATM’s.  Some will let you turn in deposits of checks at Mail Boxes Etc.  Yet, it is still somewhat of a problem.

Do not assume that a virtual bank does not have proper insurance.  Most virtual banks in the US do.  To be certain, you can go to the FDIC’s website and look up the name of your virtual bank you are considering.  Most likely, you will find it there.  Then, you can find out information about the bank’s insurance with the FDIC.  If you do not find it on the list, report it to the FDIC as an internet banking company without insurance.

Of course, there are security risks with virtual banking.  However, most of them can be taken care of by you guarding your private banking information.  Virtual banks have everything to lose if their security is breached, so they go the extra mile to assure that your internet banking is safe.

It is an age when most banking relies on computers, whether for internet banking or for transactions within a traditional bank.  You cannot get away from the use of the internet being used in your banking.  Internet banking by means of virtual banks just takes it one step further.

Internet Banking Savings Accounts

Internet banking savings accounts are being used more every year by people across the country and around the globe.  They offer a better alternative to traditional savings accounts.  People who use internet banking savings have good reasons to do so.

If you opt for a traditional savings account instead of an internet banking account, you will get a very low interest rate.  In fact, you will not make enough on your money to cover the cost of inflation.  Savings in traditional banks are generally around 1% annually.

This low interest rate barely makes it worth your effort to save.  You will be better off to buy things at today’s prices.  That way, when money is worth less, you will not have your money sitting in a traditional account where it will then buy less than it can now.  Internet banking provides an alternative to this situation.

Many traditional banks have worked to establish incentives to encourage saving among their customers.  They have set up programs where extra money can be put into savings automatically.  They have also encouraged the use of automatic transfers to your savings weekly or monthly.

These measures do not work because the interest rates are so low that people see no future in saving.  However, with internet banking, all that changes.  Internet banking institutions tend to offer rates more along the lines of 4.5% to 5%.

This difference allows consumers to put money in internet banking savings accounts and know that it will retain its value over time, as long as the rates stay up.  With the traditional savings, rates would have to soar to even come close to this level.

Another advantage of internet banking savings accounts is a good deal for the small investor.  You may not have large amounts of money to save at one time.  If not, you are like many financially strapped Americans.

In many traditional banks, this means that you will be given the lowest possible interest rates.  If you go to a brokerage firm, you cannot open a money market account for less than $1000 as a minimum balance.  Sometimes it is even more.  This is not so for internet banking savings accounts.

If you have your savings through internet banking, you will be able to have high interest rates at any level of investments.  You can start your internet banking savings account with as little as $100.

You might have to pay service fees until you reach a certain threshold, usually a few hundred dollars.  After that, you will be making money at better rates than you ever could at a traditional bank.

One downside of internet banking is that some of the major banks will not deal with customers who demand a lot of time.  They will discourage these customers from using their services because they are too hard to handle.  This is not true of all internet banking, but if you need a lot of help, you should be aware of it.

Overall, though, savings done through internet banking institutions still work out better for most people than traditional savings accounts.  There is just no reason to deny yourself the best interest rates your money can earn.

Internet Banking Research

Much research was done on internet banking even before it was started.  The research continues to this day, with more and more participants involved.  As people use internet banking more, it gives researchers more reasons and subjects to study.

One study showed the devastation of identity theft on individuals.  They had trouble getting jobs, loans, and insurance, for example.  They could not conduct business in a bank, not even internet banking.  Some ended up in very difficult positions.

The study suggested that banks, including internet banking institutions, would do well to proclaim themselves as the champions of identity protection.  This would help them by limiting their losses.  Besides this, they could charge a fee for the service.

Another study evaluated how people felt about the security of their internet banking transactions.  78% of them stated that they would like some kind of verification of their identities to be carried out at certain times.  This, they thought, should be done at the moment that unusual transactions were being done on their internet banking accounts.

People seem to be getting more comfortable with internet banking every year.  One study showed an increase in internet banking of 9.5% between 2006 and 2007.  Another study predicts that 76% of the households who have an internet hookup in the year 2011 will also do internet banking.

It is true that internet banking and online bill paying are predicted to continue their rise in popularity.  However, viewing bills electronically is expected to decline.  Payment by other means besides internet banking is also expected to go down, including bill paying by phone.

Some studies have made use of surveys that ask people if they want alerts for their internet banking accounts, and if so, what kind.  It turns out that consumers do want alerts for their accounts.  What is more, they want a lot of alerts for a variety of occurrences.

They want to be alerted when a bill is going to be paid and when it has been paid.  They want to be able to set an alert to tell them when a certain check has cleared.  They want to be alerted when there is any inkling of fraud.  This one, of course, is an especially good idea.

The demographics of internet banking have also been studied.  It seems that the middle income people who use internet banking are afraid they will lose control without better records.  Anything that can be done to give them better records will make them more comfortable to use online banking.

The lower income people have many reasons for not using internet banking.  The over-$100,000 group seems to use it more.  They also tend to use it without fear.  This may be because they are in less danger of running out of money and overdrawing their account.

A new field of study is social networking.  This is a concept that involves the use of internet banking by networks of people.  They are usually in their 30′s and 40′s.  They put their money together to make deals with financial organizations.  Study is geared towards finding out how this will affect internet banking for these people, and for all internet banking customers.

Internet banking research is going on, and will continue to go on as long as online banking exists.  The banks want to know how to stay profitable.  Hopefully, they are also interested in how to better service their customers.

Internet Banking and Privacy Policies

Privacy policy legislation affects internet banking just as it does any other type of banking establishment.   You might want to keep your personal information private.  If so, it is good to know how your bank treats privacy policy.

A study was done to determine how well different banks, including internet banking companies, dealt with privacy policy.  All financial institutions should have privacy policies that are consumer friendly.  This is in keeping with the spirit of the law.

The law in question is the Gramm-Leach-Blily Act, or GLB, as it is often called.  This was enacted by Congress in July of 2001.  It gives power to financial institutions to conduct business in many important ways.

More importantly to consumers, there is a section devoted to the privacy of banking customers, including internet banking customers.  Banks must provide consumers with a copy of their privacy policy.  This explains how your personal information will be used by internet banking operations and other banks.

Your personal information would include any information that can be identified as your particular information.  It could be your name, address, social security number, internet banking transactions you have made in your name, and other information.  It could also be any information that can be guessed by having some of this information.

The study evaluated bricks and mortar banks, clicks to bricks banks, virtual bank internet banking operations, and other financial institutions.  It compared each company’s privacy policy, how they informed consumers about their privacy policy, and what options consumers had with them to “opt-out.”

If you opt-out, you are saying to the company that you do not want your information to be shared with other companies that are not affiliated with the bank.  Under GLB, internet banking services still have the option of sharing your information with affiliates and marketing partners, but they should inform you that they are doing so.

One problem has been that the privacy policy statements sent out to consumers by internet banking companies and other banks have been impossible for most people to decipher.  They are not exactly an easy read.  There is a movement to make them easier to understand.

Another problem is that some internet banking companies have made it very difficult to opt-out of having their information shared with unrelated businesses.  It should be the easiest with online banking.  Indeed some internet banking companies have online forms to fill out so that you can be finished with it in short order.

However, some internet banking sites make it nearly impossible to opt-out.  They make you go to an 800 number, or write for a mail-in form, or they may not have opt-out at all.  These are in the minority, but you should watch for them when comparing online banks.

The good news is that virtual internet banking companies that offered standard banking services like checking and savings accounts scored the best in the study.  If you want to keep your information private, check out your internet banking institution’s privacy policy before you sign up.

Internet Banking and Investing

Internet banking investing is ideal for those who have a little more than is needed for a small savings account.  Although internet banking savings accounts do better than traditional accounts, investment accounts have much more potential.

The first thing to remember, though, is that internet banking investment accounts are not FDIC insured.  You are taking a risk to put your money in such accounts.  Yet, the possibility for financial gain is so much greater that, for most people in a position to do it, it is well worth the gamble.

In fact, knowing how much risk you can tolerate is crucial in knowing how to plan your internet banking investing theme.  You need to determine how much of your holdings you will put into high risk ventures like certain stocks.  You also need to figure out how much you want to balance that with lower risk vehicles like bonds.

This balance is part of your internet banking investment process.  You cannot put all your money in one form of investment without making a very unwise decision, in almost every case.

You need diversity in your internet banking investment portfolio.  This will allow you a chance to make some serious money, and at the same time, protect part of your assets in case of a drop in stock prices.  You also need to reevaluate the percentages of low risk-high risk investments in your internet banking portfolio. They will naturally change over time and need correcting.

You can use an internet banking savings account or invest your money in higher yield products.  You will need to bear a few things in mind.  When money compounds, you are making money without effort.  This can come from savings or investment.  Furthermore, you must find a way to beat inflation in both cases.  Otherwise your money will be worth less when you take it out than when you put it in.

International investments through internet banking are becoming more important as world communication increases.  The planet is becoming so connected that investing in another country is like investing in the US in many cases.  This makes internet banking all the more important.

Many investment firms suggest that you cannot invest properly without sitting down face to face with an investment professional.  This may be a good option for many.  However, much profitable investment takes place through internet banking.

Furthermore, just because you are investing through internet banking, it does not mean that you will not have access to professionals.  You will be able to go to people who will assist you with advice on your financial decisions.

You can generally read about the credentials of these people in the “About Us” section of the website.  It is important to know that brokers are people who deal with different companies to try to offer you the best investments, through internet banking in this case.  Financial advisors can help you with all aspects of your money matters.

There are ways to use internet banking to do investing in a variety of stocks and bonds.  It makes the process easy and fairly quick.  It will be an important way for people to prepare for the future in coming years.

Internet Banking

Perhaps you have decided that internet banking is for you.  Now, you have to get set up so that you can start using online services.  Depending on which kind of Internet Company you are going to use, there are different ways to start using internet banking.

If you want to register for internet banking with your bricks and mortar bank, or “clicks to bricks” as it is called, you will find the process simple.  You can call the bank and ask to register for their online banking services.

They will send you the information you need.  You will receive an instruction sheet in the mail.  It will explain how to log on to the internet banking website.  It will also give you a unique username.  Usually, this username will not change.

The letter will also advise you on security issues with internet banking. It will explain requirements, such as that you have 128-bit encryption on your computer.  It will tell you how to enter your username on the bank’s website.  It might counsel you to type in the bank’s URL carefully to avoid phony websites that are set up to get your information.

The next letter you will get will be one with your temporary password.  It will give you instructions on how to change your password.  It will tell about the various security tokens you have to choose, such as images and captions.  Then it will tell you how to sign on to the bank’s site and begin internet banking.

If you are using a virtual bank, the process is a little different.  To begin, you must first open an internet banking account with the virtual bank.  You can start by choosing the virtual bank you will use for your personal or company’s business.

Many considerations are the same as with bricks and mortar banks.  You want to make sure they are FDIC insured.  You will be interested in their interest rates on savings accounts, loans, and certain checking accounts.  It might be necessary to know the bank’s overdraft fees.

You will also be wise to read any information they have on their rules and procedures.  It may be dull reading, but it can be important to you.  You need to know what your rights are and what the bank expects of you.  You will be asked to agree to these terms.  If you are doing your internet banking with a virtual bank, print off this information.

Once you choose a virtual bank, you will set up your account.  You can do this by starting at the bank’s website.  Make sure it is the reputable virtual bank you have investigated before you give your personal information or send any money.

The virtual bank will let you choose a username and password, within certain parameters.  Then, you can get down to the business of starting your internet banking account.  This will start with some input from you.

You will give all the usual information that you would give to any bank where you set up an account.  Common questions are your name, your address, your phone number, your social security number, and your place of employment.  Then, you will send the virtual internet banking company some form of deposit to get the ball rolling.

When you have yourself all set up to do internet banking, you can start making transactions with the click of your mouse.  It is fairly simple, whether you are doing internet banking by clicks to bricks or virtual banks.

Internet Banking Fraud

Internet banking, like any other business arena, is susceptible to fraud.  Phonies abound in every type of business, and this is no different.  Yet, there are some ways you can prevent being taken.

One kind of fraud is done on fake bank sites.  These are look-alike sites that imitate your internet banking website.  They sometimes pop up when you type in a slight misspelling of your bank’s web address.

If you are not paying attention, you can type in your username and password before you realize you are not connected to your own bank at all.  You should always type in the bank’s web address carefully to prevent this from happening.  Most banks have names that are simple to remember, so this should not take too much effort.

Another type of fraud is “phishing.” This is the use of emails to lure you onto a fake bank website to steal your information.  You might open the email and find a request for information from “your bank.”  A link will be provided to you.

If you click on the link and go to the fake bank site, you might give up all kinds of valuable information if you do not pay attention to what is happening.  You could be asked not only your specific internet banking information.  You could also be asked for other private data like your social security number, or your driver’s license number.

One thing to remember is that a legitimate internet banking operation will never ask you for the password for your account.  This is your private information and you should not give it to anyone, even if they claim to be from the bank.

Your bank will also never ask for personal information through an email link.  Anytime you deal with the bank online, type in the bank’s name yourself.  Then look to be sure the closed lock symbol appears on the upper right corner of your screen.  You will never go to your internet banking website without being able to see that locked padlock symbol.

Sometimes, no matter what you do, a fraudster will find a way into your bank account.  The best defense is to watch your account carefully.  If you always know what money is going into and out of your account, you will notice if something unexpected is happening.

If you see withdrawals on your account that you did not make, be sure to report it to your bank right away.  Internet banking frauds are often hard to find.  If you do not act quickly, you make it nearly impossible.

Once you have reported it, you can make arrangements to put your money in a new secure account.  This way, the crooks will be able to steal less money from your account and you will not be vulnerable to further attacks.

The bank has many procedures to safeguard the security of your internet banking. However, you will fare better if you take some steps to protect yourself as well.  It only makes sense.

Internet Banking

If you keep a large balance in your internet banking account, it may be easy for you to keep it in good standing.  However, if you are like many people, you might be running on a tight budget.  If so, you will need to be careful about how you handle your account.

One of the most important things you can do is to confirm that any deposits that should go into your account are credited.  They must, of course be in the internet banking account before you can draw them out.  If you are paying bills with them, they need to be in place.

If you have direct deposit, you may become slack about checking to see if the money is in your account.  This is a bad habit to get into for a couple of reasons.

First, there could be a banking error on the part of your internet banking firm or on the part of the sending bank.

Second, the amount of the deposit could change for some unexpected reason.  In either case, you will need to know immediately.  Besides, with internet banking, it is simple to go to your computer and check your deposit as soon as you expect it.

If you make manual deposits, the wait time will be longer.  It may take a week or longer for a check to get to your internet banking headquarters if you mail it in.  You need to check for the deposit so that you will not spend money that is not there.  What is more, you should know your company’s policy about holding checks, if it is a large one.

With internet banking accounts, you can set up bill paying online.  You set up the payees in advance and type in how much to send them and when.  Your bank will even send you emails when payments are made if you request it.

However, it is easy to let these automatic bill paying services get out of hand.  If you set up all your bills and do not keep a watchful eye on your internet banking account, you could be in trouble.  If you let your balance get too low before your bills become due, the bank will still pay them as scheduled, up to a point.

When they do, they will charge you an overdraft fee every time.  Eventually they will close your internet banking account and present you with a bill.  If your money is this tight, it might be best to set up each payment as close as possible to when it is due.  That way you will not forget it.

If you do use automatic bill paying, you need to be certain to take these deductions into account. When you use your ATM card or debit card, you should keep in mind how much money you have in your internet banking account and how much money is scheduled to come out before more money comes in.

Perhaps the most important thing you can do to keep your internet banking account in order is to check it often.  If you are one of the many people who do not have extra money to leave in an internet checking account, it pays to watch for mistakes and oversights.

online bill payment

Internet banking can make paying bills a quick, easy task.  Once you set it up, it can be done automatically, if you choose to make it that way.  Or, you can pay each bill individually.  Either way, you be more accurate and save time as well.

Some internet banking companies allow you to do online bill paying for free.  You usually have to have a “qualifying account,” but the rules for those vary.  You can also get free online bill paying if you carry a large balance in your internet banking account.

For some banks that amount is $1000, for others, it is $5000.  Otherwise, you will have to pay a fee, which will be well under $10 per month for a certain number of bills paid and an additional fee for extra bills.  This additional fee is usually under $0.50 per bill.

To sign up for automatic bill pay through internet banking, start at your bank’s website.  There should be a tab marked “bill pay” or something similar.  Click on that and you can enroll in their bill paying services.

Then, you will be instructed in how to set up your payees.  You will go to a tab marked “Add Payee.”  This will give you options of how to list the people you are sending money.  You will probably be asked the name and zip code of the company.  Some internet banking services will ask you for the company’s address, too.

Type in the information you have about your payee.  Or, if the company you wish to pay is on a list compiled by the internet banking company, you can simply click on it and select it.  You have now set up the person who is to receive payment.

Next, you designate which account from which that person or company is to be paid.  This is particularly important if you have several accounts with the same internet banking operation.  Your accounts will be in a drop-down list where you can select the one you want.

You can set up a bill payment up to a year before you have it taken out of your account.  You cannot do an immediate bill payment.  It will take a certain amount of time for the payee to receive payment.

You can set up recurring payments to be taken out of your account periodically.  These payment arrangements are commitments.  Unless you cancel them in time, they will be paid.  If you do not have the money in the internet banking account for them, you will overdraw.

You can find out if your payment has been made in different ways.  You can opt to be notified by email from your bank every time they pay a bill.  The payment will also show up in your internet banking account transactions on the website.  You will also know from your next bill from that company if a payment was credited to your account.

Paying bills through internet banking is easy once you get the hang of it.  If you set it up correctly, it takes very little management to keep up the steady stream of payments going from your account to those with whom you do business.  Now, if internet banking could come up with a way for you to stop having to pay bills, you would have it made!

Internet Banking Security

Internet banking companies are working hard to make their servers as secure as possible.  They work with experts in the field of security.  They hire computer-hacking consultants to show them the vulnerabilities of their systems.  There are also things you can do.

The bank will suggest, if not require, that your browser have 128-bit encryption.  This just insures that your information will be safe as it leaves your computer just as it is when it is on the bank’s secure server.  If you do not have the latest version of your browser, you may not have 128-bit encryption.  Make sure you have it before you begin.

Your username will either be given to you by your clicks to bricks bank, or you will choose it at your virtual bank.  If you choose it, there will be specific rules about how many characters it must have.  It will also tell you whether you must use both letters and numbers, and capitals and lower case letters.  Choose something that is not guessable.

Similar, if not the same, rules are given for your password for internet banking.  (You will always choose your password, no matter which kind of bank you use.)  Your password is even more important.  There are certain ways you can make your password more secure.

For one thing, you can base it on something you know or like.  It can be anything that no one would specifically relate to you.  It could be a line from a song, for example.  You could take the first letters of all the words and make a string of characters for your internet banking password.  Then, you could capitalize some of them, throw in some numbers, and you have a password that will be hard to guess but easy for you to remember.

In any case, you should memorize your password and destroy any paper where it is written down.  Then, you should change your internet banking password frequently.  Do not tell anyone your password, no matter how close you think you are to them.  Unless they are on the account with you, there is no reason for them to know it.

It is always important to log off when you finish with your internet banking transactions.  If you use a public computer, it is even more important.  However, doing internet banking on a public computer, such as one in a library, is not the most secure course.

An industrious internet thief can get your information off a public computer without too much trouble.  However, some internet banking companies offer a special service that prevents your banking transactions from going into a computer’s cache memory.  If you use this feature, it makes banking at a public computer much safer.

It is also important that, if you do use your computer in public, you assure that no one can see the screen when you are doing internet banking transactions.  You should not let anyone see you use your keyboard either.  While many people feel comfortable setting their laptops up and doing their business anywhere, it is not always wise.

There are many ways to protect your personal information when you do internet banking.  It requires thought and caution, but it can be done.  It is important to remember that you are responsible for the way you protect your information online.