Basic Online Banking Terminology
Demystifying common online financial terms.
Becoming familiar with online banking terminology is simple and may even make you feel more enthusiastic about giving online banking a try if you haven't done so already. Just understanding certain concepts can make the whole thing seem less intimidating. Online banking terminology is similar in many respects to regular banking, with just a few outstanding differences.
Common online banking terminology:
Direct deposit: This is a convenient and popular way to deposit money electronically. Since there is no physical check involved, there is no need to worry about a stolen or lost paper check, and you can eliminate a trip to your local bank. Many companies use direct deposit to electronically deposit employee checks directly into their bank accounts. In addition, the federal government uses this method for income tax refunds, because it's faster and more efficient. Also, you can have Social Security checks electronically deposited.
Online banking: Online banking enables you to access your personal and business accounts via a computer connected to the Internet. This type of banking is secure and password-protected. Once you sign up, you can check your account balances, pay bills, make transfers and view statements.
Online bill pay: Many banks offer an online bill payment system, offered in most cases for free. Paying bills on your bank's website enables you to post a list of payees or creditors under your account. Then you may pay most bills, such as your mortgage, utilities or even your babysitter, via the Internet from your computer, spending less money on stamps and making fewer trips to the bank.
eStatements: Once you've signed up for online banking, you'll be able to view and download your monthly checking or savings account statements right on your computer. It's environmentally friendly and is generally safer than receiving your bank statements in the mail. Plus, you can view them any time of the day or night.
Automatic bill payment: With automatic bill payment, you may schedule your bills to be paid before they come due, so you never miss a due date. An installment loan, such as a car loan, that has equal monthly payments is a good candidate for this online banking feature. At any time, you can remove the automatic bill pay option or postpone the payment.
Electronic bank transfer: This allows you to easily transfer money between your bank accounts online, and the funds should be debited and credited right away. You can also transfer money to an external account, such as a money market investment account at another financial institution. In this case, however, the transfer may take an additional few days to be credited to the external account.
Electronic funds transfer (EFT): This is the process of transferring funds via electronic means, which includes using debit cards, ATMs and automatic withdrawals from a bank account.
Mobile banking: Mobile banking allows you to use a mobile device, such as a personal digital assistant (PDA) or smart phone, to bank online. It's easy and convenient. With your mobile device you can check statements, make transfers or perform any other online banking activities.
Getting acquainted with these simple online banking definitions might help you feel more comfortable trying this valuable service. Banking online can save you money and free up precious time. Even better, online bill pay is often a free service for existing customers. Check with your financial institution to see if it has an online demo or to learn more about getting started.