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advanced online banking is one of the differences between banks and credit unions

Banks and other depository institutions by the busload are going online with their services. Not long ago the federal banking agencies estimated that more than 3500 depository institutions have active web sites.

Most of these sites are informational only. They tell you what services the bank offers, where its facilities are located, and how you can apply for loans and other services. Roughly one-third of the banking web sites let you carry out actual transactions, such as moving funds from one account to another or paying bills. Ultimately, nearly all banking institutions are expected to have active web sites with at least some transactional capabilities.

What are the advantages for you, the consumer, and for the firms offering these services? For the depository institutions going on-line the greatest advantage is cost. A typical Internet banking transaction costs the financial-service provider pennies – more than a hundred times less than the cost of a transaction carried out through a human teller, about 50 times cheaper than a telephone transaction, and almost 30 times cheaper than a trip to an ATM.

For the consumer, instead of having to do your banking during “banker’s hours,” you can conduct transactions when it’s convenient for you. Moreover, you can save money and time if you do bill paying through your bank’s web site.

Also coming online are “screen scrappers,” which can give you a summary of your financial transactions – what’s happening in your checking and savings accounts, to your stocks, bonds, and mutual funds, where your credit card accounts stand, etc.

Safety and privacy seem to be the biggest consumer worries. Sending private information over the Internet seems to invite snooping; a clever hacker may steal funds. Moreover, unless you verify you have your desired bank’s web site, you could send your funds to a fraudulent site or to an uninsured depository institution. Contact the bank you wish to trade with to double check that you have the correct address. Besides, some consumers worry that Internet firms will sell their private data to others. According to the Federal Reserve Bank of Dallas, banking regulators are working to limit this problem by preparing and updating Regulation P, requiring the financial institutions they supervise to make public their privacy policies and offer the consumer the opportunity to “opt out” of sharing personal information.

Moreover, bankers are working hard to preserve the safety of consumers’ funds through the use of PIN numbers and other means of identification. The Electronic Fund Transfer Act and Fair Credit Billing Act limit a customer’s liability if his or her data is stolen. As always, know your rights and stay alert when transacting in the financial world – vigilance pays!

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