Online banking is one of the most significant improvements that the banking industry has been able to deliver in recent decades, and provides Internet users with the opportunity to take closer control of their finances. This, in turn, leads to opportunities to avoid unnecessary charges and to save money.
Preferential savings interest rates:
Many banks reserve their best savings rates for accounts that can only be operated via the Internet. These accounts are managed through online banking with money being lodged into, and withdrawn from, the account by electronic funds transfer.
Transferring money into savings accounts on pay day:
Committed savers often log into online banking on their pay day and immediately transfer a sum of money across to their savings account. This means that they can maximise the interest that they get from their savings account and it removes the temptation of spending all the money that’s in their current/checking account. You may also be able to request to receive an electronic alert to tell you if your main bank account balance goes above a certain threshold. This may then act as a trigger to log in and transfer some more money across to your high interest savings accounts.
Avoiding overdraft fees:
Many people end up incurring costly fees where they have inadvertently allowed their current/checking account to exceed their authorised overdraft limit. Often, they get into this position because they have not been aware how close they were to exceeding their allowed limit and perhaps a direct debit or other payment comes out of their account that they weren’t expecting.
Online banking provides a mechanism for people to check their balance at any time and can be an invaluable tool to help people manage their finances more successfully. It also allows rapid transfer of funds from other accounts if you discover that you are about to go overdrawn. For example, you may be able to make an instant funds transfer of money from your savings account into your current/checking account.
Many banks are also starting to offer online banking alerts, whereby you can either receive an e-mail or a text alert to tell you when you are getting low on funds. For example, you may be able to set proximity balance alerts to tell you when your account goes below an amount that you specify.
Help with budgeting:
People who are good at saving money normally are those who understand the importance of budgeting. Having a budget basically just means that an individual regularly monitors how much they are spending, what they are spending it on, and then sets targets in terms of how much they will spend and put into savings accounts going forward.
Online banking can help with this by making it much easier to keep track of what you are spending money on. It’s possible to view online bank statements which are itemised to show what you have been spending money on. Some online banking websites may also offer various budgeting or savings-related tools. For example, they may have a savings goal calculator which shows you how you are doing against the savings target you have set yourself, or they may offer tools that automatically sort your monthly spending into spend categories.
Avoid need to visit a branch:
The final way that online banking can save you money is by allowing you to self serve from the comfort of your home or, indeed, from anywhere where you have access to a computer. Previously, you may have had to visit your local branch which would mean incurring the cost of travelling to the branch and which would have taken up more of your valuable time. Indeed, with the growth of smartphones and iPads, people can often now access their online banking services via their mobile device, either through an application (for iPhone, iPad, Blackberry, etc) or through the device’s Internet browsing capability.