Online Banking – Is There a Catch?

Online banking isn’t just for hipster techno geeks with a finance fetish anymore!

It’s gone completely mainstream! So easy – even a baby could do it!

According to the company Fiserv, which provides technology to financial institutions, 80% of homes with access to the internet make use of online banking. Plus, 40% of American households pay bills online. And why not?

Internet banking and online bill pay are convenient options that can help you stay organized and save time.

There’s no real reason you should actually avoid banking online. However, you should be aware of the fact that your bank probably loves the fact you bank online even more than you love the convenience. Here’s the reason why…

Banks and credit unions know that when you choose to use their online banking or automatic bill pay services, or even simply set up a direct deposit – you are less likely to pack up your money and switch to a different bank.

An article one the Time Moneyland blog describes all those “digital bells and whistles” as the “glue” that allows banks to keep you as a customer.

Research from Fiserv shows that about 50% of customers who pay bills online admit they are less likely to switch financial institutions. It’s just too much of a hassle.

You’d have to go through the trouble of  changing your account and routing number information or debit card number for every recurring bill in your budget that’s paid over the internet. For some people – the inconvenience is enough to say “screw that I’ll stick with this bank.”

Once a financial institution gets you banking online – there’s a good chance you’ll be hooked for good.

In fact, Fiserv says the more digital services a customer is connected to the less likely they are to switch banks.

The good news is that people who bank online tend to be more satisfied with their financial institution.

The bad news is some people get a little too comfortable and they let their bank walk all over them.

Remember, right now many banks are trying to find new sources of revenue. That’s because new and upcoming federal regulations are cutting money that financial institutions made from things like overdraft fees and debit card swipe fees.

While we may get to say  “bye bye” to those fees, we can also expect to say “hello” to new fees.

Geoff Knapp, the vice president of online banking and consumer insights with Fiserv, predicts more banks could start charging fees for some digital services. But he says it’s also possible that some banks could keep digital and mobile services free and instead start charging extra for people for transactions made offline.

That means you could get charged a little extra for some face time with that cute teller at the drive thru window.

You also have to take into consideration that online banking could be saving you money in other areas. For instance, you won’t have to pay for as many stamps to send out personal checks to pay your bills.

The important thing is that you keep an eye on what fees your bank is charging you – online or offline. If the fees start piling up for no good reason – don’t be a lazy bum! Shop around and find a financial institution that won’t suck you dry.

Image Credit: nathaniel s and lazurite

+Kasey Steinbrinck writes regularly on personal finances and the U.S. economy for Check Advantage. Visit them today and view their most popular checks including a big collection of Classic Checks.

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Tagged as: credit union, fees, Finance, Financial services, Fiserv, interchange fees, Internet, online banking, overdraft fees, swipe fees