Approximately 90% of my money dealing is conducted over the internet. I currently have a checking account with USAA, a savings account with ING Direct and some business accounts with Washington Mutual. Although I’m very anti-social, this isn’t the main reason that I engage in online banking. Basically, it all comes down to the fact that I am a big fan of anything that I can complete while wearing pajamas. I enjoy being able to check my balance, transfer funds, and review my banking documents at any time. Quite often, I can only remember to do all of these things when it’s one o’clock in the morning – so I’d kinda be screwed without some sort of internet banking option. I’ve grown up with computers my whole life, so I’m more comfortable typing and clicking than actually speaking to a bank teller. For those of you who are a little anxious about banking online, I’ll discuss the many benefits and a couple shortcomings related to home banking.

Online Banking

The common bank out there will usually have numerous branches that you can visit in person and might also provide you with the option of tending to your financial matters online. Such financial institutions provide their customers with a win/win situation. Unfortunately, most of these banks are despicable when it comes to caring about their customers.

Other banks primarily operate over the internet, rather than maintaining any physical “brick and mortar” establishments. These are the true “Online Banks” and I consider them to be a shimmer of hope in this dismal land of money grubbing financial institutions. These guys are a little more relaxed than most traditional banks usually.

As mentioned above, Online Banks don’t have to build or maintain local branches. No brick and mortar facilities translates into savings for the Online Bank and it’s customers. They sidestep having to shell out money for branch employees, maintaining ATMs, security escorts for money transfers, and yada yada yada. In return, the customers usually receive a higher interest rate and fewer fees than what they might find at their local banks.

The Cons

Since the banks are online – you won’t be able to stop in for a face-to-face resolution to any problems. You will have phone calls, emails, faxes and snail mail at your disposal but if you enjoy causing a scene and getting into some employee’s face, then this isn’t the type of bank you’ll want.

Deposits can be difficult when you use an online only bank. Since they don’t own any ATMs or branches you’ll usually have to mail in your checks. This might not be a huge problem because you use a direct deposit or you transfer money from another account – but in certain situations this can be a real headache. Some online banks even allow you to deposit money into your account by sending them a scanned image of your check and then voiding it out.

Home Banking Security

A huge concern that is always floating around out there is security. You need to understand that every bank is going to be concerned with security. So whether you’re creating an online account with your long time brick and mortar bank or you’re signing up with a new internet only banking service – they are going to protect your information. All banks use sophisticated levels of encryption to transmit your personal information over the internet. I suggest that you remove any doubts about the bank from you head for now because the biggest risk to your security is probably going to be you.

The main security concern related to online banking is most likely the fact that customers become victims of online scams and fraudulent emails. This is something that your bank cannot protect you from. In fact, these scams are at no fault to your online bank – it would actually be your fault if you ever got duped. As an example, pretend that you are a member of “A1 Bank” and you get an email that looks like it’s from “A1 Bank” claiming that there is a problem with your account or asking for your personal information. If you fall for this trick and reply to the email with your personal information – you can’t blame your online bank. You can always contact “A1 Bank” to verify if they need something from you but make sure that you use the email address, contact form, or phone number from their website – not the ones in the email. Very similar to emails that look like they are from your bank, are websites that look exactly like your bank’s website. If you aren’t paying attention, you might type in your login information and the ‘bad guys’ with use that info to login to the real website. Make sure that you type in the web address for your bank or use a trusted bookmark each time. It’s best not to click on any of the links in emails that you receive, unless you know for sure who sent you the email. You could also have some malicious software on your home computer that compromises your personal information. These types of software steal your information or record your keystrokes and send it home to the ‘bad guy’ who created the software.

If you’re really worried about security, I suggest that you educate yourself on the threats. Some basic tips that I recommend for your security are (a) investing in an internet security suite and (b) using a different password for each online account that you have. If you need help remembering all of your passwords, check out Roboform. It’s also a good idea to protect yourself from identity theft with some sort of insurance policy. I recommend LifeLock but there are other programs around like ID Watchdog – it’s best to shop around.

What I like about Online Banking

The advantages are plentiful – convenience always creeps into my mind first. I do my budgeting and track my balances at random times and my banks are always ready when I am. Online Banks are available to you 24 hours a day, seven days a week – unless they are performing some sort of site maintenance which is usually done in the wee hours of the morning. Your account information never closes and with wireless internet available practically everywhere, you will even be able to keep track of your finances while traveling.

You should experience less of a hassle with record keeping and paperwork. With my banks I can manage my checking, savings, auto insurance, life insurance, IRAs, CDs, and so on under one secure roof. I can print documents off whenever I need to or save them electronically and back them up. Most Online Banks also allow you to export your financial information to your favorite applications such as Quicken or what have you.

Every internet bank that I’ve ever looked at will refund your ATM fees each month. Since these guys don’t operate any ATMs of their own, they understand that you’ll get charged an arm and leg when you go to another bank to withdraw some money. At the end of each statement period, most Online Banks will automatically refund your ATM fees back into your account. You won’t have to track anything or even remind the bank to pay you back – it’ll just show up. Keep in mind that they do have dollar limits of how much they’ll pay back each month so make sure you know what that limit is.

Final Ramblings

Don’t be scared of internet banking – embrace this wonderful innovation. If you found my website then I’d say you’re capable enough to operate an online banking account. Once you’ve created your account, schedule a day to sit down and play with all of the cool functions on the website. Remember that if you have any questions you can always call or email the bank and someone will provide you with support.

I have a severe disliking for most financial institutions, but unfortunately we all need them. The best we can do is hope that we’ve chosen to bank with one of the good guys. While I was a customer of UFB Direct’s online banking service – I experienced zero problems with their work. All of my deposits and transfers were processed quickly and any concerns that came up were successfully taken care of by customer service. UFB Direct’s services came without any fees or minimums and offered the highest interest rates that I could find at the time. I did, however, close out my accounts with UFB Direct recently because I hardly used them anymore. The main reason that my UFB accounts were stagnant was because I transferred most of my savings into my brokerage accounts so that I could readily buy stocks. I also grew tired of UFB’s constant change in ownership which meant new terms and conditions to review.

You see, at one point Sky Financial Group was the ‘man behind the curtain’ over at UFB Direct but in 2007 Sky was purchased by Huntington Bancshares. Then in November of 2008, I received notice that Waterfield Bank was taking over UFB deposits as well as imposing some new fees here and there. I eventually closed out my accounts because they weren’t being used and didn’t want to incur any fees. I have no problem with UFB Direct and would recommend them but just make sure that you review their current rates and minimums.

Why I was a member with UFB Direct

I have never had a customer service problem with UFB Direct. Even when I wrote them an email to close my accounts it was doesn’t the same day without any hassles. The hardest thing I ever had to do with UFB Direct was sign a signature card and fax it back to them, which was very simple. I lost my pin number to UFB’s debit card and they reset it within a couple of minutes on the phone. When I was visiting South Korea, I lost my debit card which was canceled and replaced without any headaches. UFB Direct had always taken care of me whenever I needed them to and didn’t bother me the rest of the time. UFB Direct only sent me my statements and important notices; I never received one piece of junk mail from them.

I also enjoyed having access to my savings and knowing that they were protected. Putting $10,000 in some stocks is much different than having that $10,000 available at a moment’s notice. While a stock could jump up 25%, it could just as easily drop by 25%. Any deposit with UFB Direct is FDIC insured and you are guaranteed to earn whatever their current rate is.

The Cons

With certain accounts you might only receive a debit card, rather than a debit/credit card. Most places accept debit so it’s not that big of a problem and you probably don’t want to go spending all of your savings anyway so maybe it’s for the best.

You can’t choose or customize your pin number; whatever they send you in the mail is what you’re stuck with. For some people (for example: me) it might be hard to remember an unfamiliar pin number. As I mentioned above, I always appreciated that UFB Direct made it harder for me to spend my savings.

When I wrote this article, you weren’t able to link external (non-UFB) bank accounts from UFB Direct’s side. In order to transfer money into UFB Direct you would need to set up a direct deposit, mail in a check, or link to your UFB Direct account from a bank account that allows external linking. For example: I use USAA (read my review) for my every day banking, so I would need to log on to USAA and add an external link to my UFB account from USAA’s interface. Once everything was verified, I would be able to send money to UFB or withdraw from UFB using USAA’s transfer process.

Final Ramblings

UFB Direct never did anything spectacular for me, but I’m kind of hard to impress anyway. When I wrote this article UFB Direct was refunding customer ATM fees, up to $4.50 or $6.00 (per statement period) depending on the type of account. This isn’t a lot of reimbursement but it’s better than nothing and you shouldn’t be withdrawing from your savings anyway. When I was a customer there weren’t any monthly service charges, but this might have changed. UFB Direct was very simple and it was easy to track my activity online at any time. If you’re interested in UFB Direct and have done your homework (rates, fees, minimums, etc.) – I recommend their services.

Visit UFB Direct and check out their rates.