Online Banking

Before we leave the Spending Record lesson, let’s touch for a minute on Online Banking.  Most people don’t pay bills via check these days; bills are usually paid online.  This makes it more convenient and can help prevent late payments; however, online banking requires some discipline to ensure that your records are kept up to date.  Because many bills are paid automatically, you can pay them without registering that they’ve been paid.

If your bank has a Bill Payment feature and if that feature does not cost extra to use, it may make more sense to pay all your bills through that site than on each vendor’s website.  Vendors, of course, want you to pay bills on their sites because that gives them the greatest visibility and control; however, it’s not necessarily the best for you.  Most vendors (credit cards, utility companies, stores, doctors, etc.) can take payments from any bank’s Bill Payment site.  Consider these advantages of using your bank’s Bill Payment featue:

• Improved visibility.  It can be difficult to track all your payments when every one is made on a different site.  Bringing them all into your bank’s Bill Payment site lets you track all of them in one place.
• Enhanced control.  You have more control over timing and amount of your payments on your bank’s site.
• Increased security.  Rather than spreading your banking information over many sites across the Internet, all your information stays with your bank.  This reduces the chances of your being the victim of cybercrime.

We’ll speak more to the topic of online shopping later, in the lesson on Spending.  See our blog post, Stewardship and Online Transactions, for more tips.

One final note: While online banking makes paying bills convenient, it may also pose a danger if you are cash-flow negative or have a low bank balance.  If your monthly expenses exceed your income, or if your account balance drops significantly on a monthly cycle, automatic bill payment may result in overdrafts.  To prevent this, pay bills manually (you can still use your bank’s Bill Payment system) until your financial situation stabilizes.  This will help prevent overdrafts, which will in turn improve your credit score.