Finances on the Internet
Paying bills and banking over the Internet offers convenience, 24-hour access to your account and, in some cases, better interest rates on savings accounts and certificates of deposit.
Electronic Banking
Electronic banking is termed "electronic fund transfer" (EFT) in the industry. Digital, computer and electronic technology substitute for paper transactions, such as checks. Your bank initiates an EFT with its customer's authorization using codes, passwords and personal identification numbers (PINs).
Is electronic banking safe?
Yes. However, do not make deposits unless you see the official FDIC logo or the words "Member FDIC" or "FDIC-Insured" on the institution's Web site or in their advertisements.
TIP: The FDIC publishes information for consumers in its brochure, "Tips for Safe Banking Over the Internet," available online at www.fdic.gov/bank/individual/online/safe.html or call toll-free 1.877.275.3342.
I noticed an unauthorized EFT on my bank statement. What do I do?
Notify your bank in writing by certified mail. You have 60 days to let the bank know about the error. After that, the bank has no legal duty to investigate the unauthorized EFT.
SIDEBAR: The bank has 10 days after an EFT error notification to investigate. The customer must be informed of the results 3 business days after completing the investigation. If the bank did, in fact, make an error, it must be corrected within 1 business day after determining that the error has occurred.
TIP: Complaints against your banking institutions can be made to the Federal Reserve Office at www.federalreserve.gov.
E-Payments
Consumers can pay nearly all their bills online using "e-payments." Utility companies, mortgage lenders, credit card companies, hospitals and other healthcare providers, telephone and cell phone companies, cable companies and, of course, Internet providers all give their customers the option of paying bills online using a credit card or a direct withdrawal from the customer's bank account.
TIP: For more information about making online payments, go to www.ftc.gov/bcp/edu/pubs/consumer/tech/tec01.shtm.
Why would I want to pay my bills online?
Paying online is convenient. There are no checks to write, envelopes to address, stamps to use or trips to the post office. The time between payment and credit to your account may be a matter minutes rather than days, as with mailed payments. Plus, you can set up regular bill payments (such as the mortgage) for several months in advance.
TIP: Payments to small companies (local water delivery service, for example) that are not set up for electronic payments must still be paid by written check.
TIP: Many bill-paying services will issue a paper check if necessary to make a payment.
Is it safe to pay a bill over the Internet?
Yes. However, there are certain steps you should take before committing to making bill payments online. To keep your personal bank account information safe, you should:
- Only use a Web site that is running a secure browser. A secure browser encrypts or scrambles the payment information you send over the Internet.
- Keep all "receipts" for payment that are e-mailed to you and print out the page that confirms payment. Always write down the payment confirmation number.
- Carefully review your monthly credit card and bank statements for any unauthorized or excess billings.
TIP: To determine if a secure browser is being used, look for the "lock" icon on the browser's status bar and the phrase "https" in the URL address for a Web site.
Are there different ways to pay my bills online?
Yes. There are several different methods for paying bills online including:
- online bill-paying services
- portal bill pay Web sites (Sites such as Yahoo!® and AOL allow subscribers to pay bills.)
- personal software (Financial programs such as Quicken and Microsoft Money typically offer online bill-paying services for users of their money management programs.)
- banks (Because you already have an account at your bank, the service may be free and technical advice may be easier to access.)
How do I get started making payments online to the telephone company, for example?
You must enroll in the telephone company's e-bill program. You will choose or be assigned a user name and a unique password.
TIP: Determine if enrollment in the e-payment service means you will no longer receive a paper bill through the mail. If you will no longer receive an actual bill, you must keep current with payments by checking your e-mail regularly for online billing statements.
TIP: If you can choose to keep receiving a paper bill, you should choose this option.
Do I need special hardware or software?
Yes. Your computer must be running an operating system (Windows XP, for example) that is compatible with the online payment service offered through the company you are paying. Typically, special software is not required if you register directly with the company (the bank issuing your Visa® card, for example). However, you will have to download software if you use a bill-paying service.
What is an online bill-paying service?
These services offer one-stop bill payment. Instead of accessing the several companies from whom you receive bills, the bill-paying service registers all your accounts and pays bills out of your checking account.
What is the cost for using a bill paying service?
The cost for bill-paying services ranges from $5 and up, plus at least a 50-cent transaction fee for each bill you pay.
TIP: Using a bill-paying service is probably not financially advantageous if you just have a few bills that can be paid directly to the company online. Companies typically do not charge customers for paying their bills online unless a "rush" payment is requested.
TIP: Most banks offer this service for their customers for a small fee. The bills are sent to the bank's payment service, which you then access. Typically, the customer chooses what bills to pay, the amount of payment and when he or she wants the payment processed.
Are there any downsides to using a bill-paying service?
Yes. One big factor is the number of transactions you may be limited to in a month. Free or low-priced services may allow only 5-10 payments.
SIDEBAR: Another downside to bill-paying services is that the company is not receiving your payment immediately since you are using a third party to process your bill. For example, an online payment made directly to your automobile insurance company may be immediately credited to your account, even if you made it on the day it was due.
Should I pay online to the company directly or through a bill-paying service?
If you have just a few monthly bills to pay (cable, utilities, one credit card, automobile insurance), you should pay online directly to those companies. It is faster to access a few sites and pay, than to go through all the steps that may be required with a bill-paying service.