checking

Pros and cons of online checking accounts

Still, online checking fees vary widely, says Robert Laura, president of Synergos Financial Group in Howell, Mich. "There's a laundry list of things to look for," he says. "Some banks are imposing fees for low account balances for the first time."

Abundant personal finance tools. Many online banks offer complex functionality that connects spending to budgets, Cohen says. "Consumers should expect this since even small banks are doing it," she says.

Take Citibank, whose personal budgeting tool tracks spending by category. Then, it matches it against a set budget. Wells Fargo and Bank of America also offer versions, some with charts that also track savings and even net worth.

"With these tools, you can receive data about expenses, bills paid and even set alerts based on certain criteria," Cohen says.

Comparison shopping nationwide. Using online banking widens your banking net. Laura checks out online banks via Bankrate's checking account search tool, hunting for high yield and safety. "Most online checking accounts pay high rates though they've come down dramatically," he says.

Disadvantages

Harder to resolve problems or answer questions. Face-to-face contact helps when resolving problems. But in cyberspace, getting good customer service can be difficult. "Can you call someone at 3 a.m.?" Cohen says. "And will the site dock you if you use the call center?" Find banks that are convenient for your needs, she says.

Security can vary. Online banks do a good job with security, says Marc DeCastro, research director at IDC Financial in Framingham, Mass. They're getting the customer more involved with transactions by notifying them if anything is awry. "It's an extra layer of security," he says.

Still, consumers are the weak link. Hacking into bank sites is difficult. So cyberthieves are targeting consumers with weak security instead. The newest twist is "man in the browser" attacks. It is a type of malware that infects a Web browser and is commonly used for financial fraud by intercepting a bank's customer logins and passwords. But by using effective password systems and encrypted bank data, banks and consumers can help to prevent them, DeCastro says.

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