These financial products are very similar but have some key differences.
What is online banking?
Online banking, also known as internet banking, describes online systems that provide users access to their personal bank account information and functions, including but not limited to account transactions and balances.
Practically every major bank offers its customers the option to sign up for online banking. Online banking is increasingly popular with customers thanks to its convenience. The service helps customers keep track of their spending so that they don’t overdraft their accounts or spend too much money. Customers can sign into online banking anywhere that they have internet access and a computer. Some of the financial tasks customers can complete using online banking include:
- Viewing account balances
- Researching account transactions
- Paying bills
- Transferring money between accounts
- Obtaining old bank statements
- Completing basic account maintenance
One of the most common services that comes with online banking is an online bill-pay function. With it, account holders have the ability to pay their bills without ever having to write checks. To pay a bill, the customer only needs a few pieces of information, including the payee’s address and any account number associated with the payee. Depending on the recipient of the check, the bank may transfer the funds electronically or mail an actual check. Customers can even set up recurring payments for their regular monthly bills.
Banks advise their customers to keep their login information confidential to protect their finances. When signing into online banking, customers should use a secure internet connection. Many banks offer a two-step security process that requires customers to verify their identities before the online system grants them access to account information; customers are encouraged to utilize this option if possible to keep their details safe.
Online banking example
A customer wishes to use online banking to better monitor her spending trends and pay bills. After signing up, she signs into the online banking portal using her designated username and password. The customer can now access her bank account information at any time of the day to check her balances (as long as the system isn’t down for maintenance).
Are you concerned that you’re overspending? Create a budget to reign in your spending.