1.7.6.G1 © Family Economics & Financial Education –March 2008 – Financial Institutions –...

1.7.6.G1

© Family Economics & Financial Education –March 2008 – Financial Institutions – Online BankingFunded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at

the University of Arizona

Online Banking

Take Charge of your Finances

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Online Banking

• In the year 2006, 63 million Americans reported that they used online banking

• 43% of internet users in the United States bank online

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Online Banking• Online banking – also known as

internet banking, allows consumers to complete transactions with wireless technology. Wireless technology includes: – Personal Computers (PCs) – Personal Digital Assistants (PDAs)– Cellular phones

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Online Banking• Consumers can access account

information and statements

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Online Banking• Consumers can transfer funds

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Online Banking• Consumers can manage bills and

apply for credit

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Online Banking• Advantages of online banking include:

– Decreased cost of paper and postage– Storing all statements online instead of keeping a

paper copy – Convenience – Paying bills online– Ability to access account anytime – No waiting for a monthly statement

• Disadvantages of online banking include: – Not as personal – Not able to access without technology – Decrease in safety features – Increase in risk for fraud

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Online Banking

Advantages• Decreased cost of

paper and postage• Storing all statements

online instead of keeping a paper copy

• Convenience • Paying bills online• Ability to access

account anytime • No waiting for a

monthly statement

Disadvantages• Not as personal • Not able to access

without technology • Decrease in safety

features • Increase in risk for

fraud

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Online Bill Payment• Online bill payment – allows

consumers to send money from one account to a vendor – Usually occurs automatically – Consumers need to check with the

vendors regarding their policy of when the payment will be processed

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Online Bill Payment• Examples of companies that use online bill

payment include: – Retailer banks– Credit card companies– Insurance companies– Energy and utility companies– Health care– Transportation companies– Education expenses

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Online Bill Payment

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Online Bill Payment • Important financial aspects include:

– Checking with the vendor or company to understand their policy of when transactions are complete

– Confirming there are enough funds in the account to cover the expense of the bill

– Confirming bill will be paid, money will be taken out of the account, and the transaction will be completed

– Their financial information is secure and it is safe to make online transactions

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Determine Security • The Uniform Resource Locator (URL)

ends in “s” which stands for secure • A closed lock to the right of the URL or

in the bottom right hand corner of the web browser to indicate a secure site

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Insecure Practices• Email accounts are not secure

– Do not send important information such as:•Social security numbers •Bank account numbers•PIN numbers

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Consumer Protection• The Federal Bank of Chicago suggests the

following: – Passwords are a combination of letters and

numbers – Change passwords once a month– Keep all receipts and compare them to bank

statements monthly – Log out of depository institution Web sites

immediately after you finish working – Contact the depository institution directly with

any questions or concerns

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Recurring Payment • Recurring payment – bills are set to

be paid on the due date or a previous date set by the consumer – Payment will happen automatically

electronically

• Advantages of recurring payment include: – Save money on postage – Saves time for the consumer – Bills are paid on time

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Regulation E• Regulation E – covers all electronic

fund transfers including transfers occurring through an electronic terminal, computer, telephone, or magnetic tape – The transfer must be conducted with the

purpose of authorizing a depository institution to debit or credit a consumer's account

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Consumer Protection• Privacy Policy outlines how a

consumer’s information will be used and protected

• Opting out of a financial policy allows a consumer to request a depository institution to share only a limited amount of personal information

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Conclusion• Review

– Define online banking – Review what transactions can be

completed through online banking– Discuss advantages and disadvantages of

online banking– Discuss online bill payment – What are secure and insecure online

banking practices?

• Any questions?

1.7.6.G1 © Family Economics & Financial Education –March 2008 – Financial Institutions –...

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