Using online banking can help you build better financial health. However, not everyone takes advantage of the features many online banking apps offer.
If you’re ready to enhance your online banking experience, keep reading. In this article, we’re sharing what online banking is, the benefits of using it, and seven ways you can have a better online banking experience.
What is online banking?
Online banking – sometimes called “electronic banking” – means managing your bank transactions from a computer. When you log into an online banking profile, you can see the bank accounts, credit accounts, and lending products you’ve opened with that specific financial institution.
Some online banking features you might already be taking advantage of include automated balance alerts, online transfers, and direct deposit.
Surprisingly, only 44% of US bank account holders processed online banking transactions in Q4 of 2023, and only 64% of bank account holders processed banking matters on their smartphones or tablets.
While branch visits have dipped and risen over the years, there’s still a solid percentage of customers who prefer in-person banking.
However, physical branches have limitations. You may have to wait in line, deal with a bank representative who isn’t versed in money management, or miss out on relevant products.
Let’s take a look at how online banking may be the best way to support your financial health.
4 Benefits of online banking
Here are four ways online banking can support your financial health.
Automated savings transfers
Support your savings goals by setting up automated transfers to your online savings account every time you get paid. At the time of this writing, financial institutions like SoFi, PayPal, and Wise are offering competitive interest rates on their savings accounts of over 4%.
This is one of the simplest and most powerful ways to build wealth – find a savings product with a good interest rate, set up automated transfers, and never touch it.
Financial visibility in real time
Always know what’s happening across your bank accounts without waiting for statements to come in the mail or asking your banker. Sign in to your online bank to see if a direct deposit check hits, watch your savings account grow, and manage your credit card payments.
Wealth protection and wealth-building features
Many online banks go beyond basic checking and savings accounts, offering integrated wealth protection and wealth-building features. This might include direct access to investment products like stocks or ETFs within the online banking platform.
You may also find budgeting tools, cashback rewards programs, and high-yield savings accounts designed to help you manage your finances effectively and grow your wealth over time.
Credit-building opportunities
Get notifications about new lending products to build credit and have access to emergency funds.
Most online banks will suggest relevant credit-builder accounts throughout your online banking experience. They’ll tailor these offers according to your financial history, credit score, and income level.
For instance, low- or no-credit banking customers might offer a secured credit card, secured savings account, or secured loan. Mid-range credit customers might offer a standard credit card with a low credit limit. Customers with high credit scores might suggest a rewards credit card or line of credit with a higher credit limit.
7 ways to make the most of your online banking experience
Now that we’ve laid the foundation, let’s take a look at seven simple things you can do to boost your financial health with online banking.
1. Monitor your credit score
Keep up with credit score changes and learn why your score went up or down. Many online banks offer credit-building literature and insights into your credit score so you can learn what’s affecting it and how to repair it. You can also set up automated credit monitoring alerts so you can know when your score changes in real-time.
Here are some other ways you can support your credit score with online banking:
- Set up automated credit card or loan payments
- Set up automated payments for your rent
- Apply for credit-building accounts
2. Keep personal and business accounts separate
Open separate accounts for personal matters and business matters — even if you don’t own a business. This is a simple way to organize your financial transactions and manage your money goals.
If you run a business, separate your finances to streamline your bookkeeping process and gain clearer insight into your revenue growth. Open another account for business emergencies.
If you don’t run a business, keep separate accounts for your mandatory expenses and your discretionary expenses. Your mandatory expenses include routine debits you have to pay for, including your rent, utilities, and phone bill. Your discretionary expenses are debits that are non-essential, such as entertainment or travel costs.
3. Manage security and alerts
Turn on alerts and security features so your bank can notify you if there’s a security breach or potential identity theft.
For instance, you might get an email that your wireless carrier had a data leak, which included your bank account numbers. Or, you might receive an SMS alert that someone tried to use your credit card in another state. Better yet, make sure you use a reliable VPN to keep your connection private and secure while logged in to your online bank.
Your bank will also offer you a solution within the alert or message so you can immediately sign any required forms, open new bank accounts, and secure the rest of your money.
4. Set up multiple points of contact
Head to your online banking profile and fill in all contact fields available, such as your email address, phone number, and home address. This is key to getting a quick notification if you need to approve a large transaction or manage a security alert.
Having multiple points of contact is also important when you’re traveling and are more susceptible to getting your cards declined. Even if you notify your institution that you’re on vacation, your bank may still flag a transaction as a routine security measure.
By replying to a bank alert with an approval code, your bank can push the transaction through so you’re not stuck on a trip without money.
5. Filter through accounts to see deposits and withdrawals
Access online statements for official matters or filter through your accounts as needed to keep up with routine deposits and withdrawals.
Your bank should have a search bar above your transactions where you can type in a keyword to pull up specific credits and debits. For instance, you can type in a client’s name to see their quarterly deposits or a lender’s name to check on the monthly payments you’ve submitted.
Filtering is also a great way to:
- See where you’re money is going (so you can make spending adjustments)
- See how you’re money is growing (so you can capitalize on what’s working)
- Keep up with profit and loss
6. Use mobile banking
Take advantage of online banking services on the go with mobile banking. Mobile banking means accessing your bank’s mobile app on your smartphone or tablet. With a few taps, you can scan mobile check deposits, transfer funds, or double-check your balance.
Having mobile banking is also a must when you’re traveling and need to easily access your accounts. Most banking apps also offer chatbots so you can send a message if you need real-time support.
7. Download a balance app
Always keep an eye on your balance. Some banks offer a separate app you can use to check your balance on your mobile device screen without having to sign into your account.
After downloading the app, you can quickly glance at your smartphone screen to see your checking account balance in real-time. This feature is also a helpful way to prevent “money blindness.”
Banking customers often swipe their debit cards without tracking their transactions. While keeping a ledger book is the best way to know your real balance (due to delayed pending transactions), a balance app can at least give you more insight than simply swiping without knowing.
Since you don’t have to sign in to use it, there are fewer barriers to entry and more reasons to stay on budget.
Wrap up
Maintaining good financial health is essential to meeting your savings goals, paying for mandatory expenses, and having extra money to spend on things and experiences you enjoy.
Thankfully, with online banking and mobile banking, you can gain more visibility into your financial health, automate your savings, build wealth, and protect your credit.
For good measure, here are the seven digital banking tips we shared in this guide to help you get the most out of your experience:
- Monitor your credit score
- Keep personal and business accounts separate
- Manage security and alerts
- Set up multiple points of contact
- Filter through accounts to see deposits and withdrawals
- Use mobile banking
- Download a balance app
That’s it for now. Here’s to your financial success!