ONLINE BANKING GUIDE

Why Bank Online?

Control, that's why. It's so much easier and cheaper to transfer money, pay bills, apply for a credit card or shift your savings into a higher interest account. No queues during your lunch hour, no rushing to get to the bank before it closes and certainly no worries about dealing with pressing transactions at ten o'clock at night if you feel like it. You can do it all from the comfort of your PC.

Most of the services currently available let you monitor your account and conduct much of your business 24 hours a day, 365 days a year. (Actually, if we're going to split hairs, then this is a bit of a fib. Even some of the "open all hours" services close for an hour or two in the dead of night, so if you like to shuffle your money around when the rest of us are asleep, take care whose service you use).

However, the benefits of being able to track and manage your finances online are very real. And by making it easy for you to move money between accounts, you should be able to make it work harder for you by keeping more in higher-earning accounts. After all, you can now use the Internet to find the best rates on savings, cards and loans etc. any time you like.

The reason online banking is more efficient is that it costs banks less to run online services -- so you're more likely to benefit from much lower overdraft charges (as much as half the rate of ordinary banks), as well as earn impressive rates of interest on surplus funds in current accounts.

And the beauty of it is that it's comparatively easy to switch things around if charges go up or rates fall. It's usually very simple these days to open an account online. You just log on, answer the various questions, provide a password and print off the completed form for signing. If you can't print it off, they'll do it for you and fire it off to you in the post. (A real signature is a legal requirement so you will have to put pen to paper in the early stages).

Why Change Banks?

Did you know that we are more likely to divorce or move house than change banks? It's true! Most of us open our first ever bank account in our teens and then we stick with it forever and ever and ever. Why? Looking back, did you really know what you were doing when you first toddled into the local Grabbit & Run and exchanged smiles with the nice lady behind the counter before signing on the dotted line and handing her your precious pocket money? Or the meagre income from that newspaper round? Or your first student loan for college? No, of course, you didn't!

Banks count on their customers not doing even the least little bit of homework before opening an account. And then, after they've snapped you up faster than the closing jaws of the hungriest crocodile, they count on you being too lazy to try somewhere else.

You'll know by now that banks make big profits. Huge profits, actually. They do this by taking your money and investing it, ostensibly for you, but really for themselves and their shareholders. Their job is to make more out of you than you do out of them and they're pretty good at it too:

• They use jargon to keep you confused.
• They offer high introductory interest rates and then quietly lower them.
• They hide the fees and costs in the small print.
• They use pretty adverts on the telly to make you think they care about you.

They do have costs, of course -- the most obvious being the interest rate that they pay you (which is why so many of the major high street banks tend to offer a miserly 0.1% on your current account!). But, to be fair, it costs a bank to maintain a branch network, to provide statements, to let you play around with your standing orders and to withdraw money from cashpoint machines. All these facilities are inducements to attract and keep you as a customer, and it costs the bank to provide them. But by offering many of these facilities online they can reduce these costs.

Much of the above might make you feel a little nervous when it comes to choosing a bank but there's no need. What we have is a simple balancing act. If a bank scores well in one area, it is bound to score badly in another. You just have to make sure that it scores well in the areas which we hold dear to our hearts, leaving it to score badly in those areas which we couldn't care less about.

You'll need to make a list of the services that you want and then ask the banks that interest you for the information you want. Some will provide the answers online (a Good Thing) while others require you to phone them up (a Black Mark). You may want to draft a standard e-mail asking specific questions and send it to all of them so you can find out who is really on their toes.

What About Loyalty?

There's really no need to consider loyalty anymore, is there? Your friendly bank manager no longer exists. Nowadays, it's cashpoint machines, robotic voices on the end of your touch-tone telephone and computerised statements. Why should you be loyal? This move towards technological efficiency is certainly benefiting them, so why not take advantage of it yourself?

Disadvantages of Online Banking?

Nothing is perfect. Not yet, anyway. Some new Internet banking services are offering interest rates for savings that are unsustainable in the long term and, ultimately, these will have to come down. But, by all means go for these high rates while they are around but watch out for when they fall.

And, judging by the odd report in the papers about technical hitches, there are clearly a few teething problems occasionally. Just as there are in any traditional bank when the person you wanted to see is out to lunch, or the internal computer system has crashed, or when Head Office hasn't sent over the forms for your new mortgage yet. So what? The only difference with banking online is that there's only the computer to shout at!

Whether you switch over now or wait a bit is a matter of choice, but it looks as though the arguments for doing so are becoming more compelling. It's true that you might find yourself without access to your account for a few hours, but, if you're like everyone else, you'll find that this already effectively happens from time to time with traditional banks.

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