Traditional Banks Online
Traditional banks, aware of the convenience inherent in banking from home, have been beefing up their online offerings. Typically, these offerings come in two varieties: either you have personal finance software on your computer and use it to connect to your bank's Internet address, or, without any special banking software on your computer, you simply connect to the bank using whatever means you're already using to log on to the Net.
Let's first look at connecting with your bricks-and-mortar bank through the use of your personal finance program.
CheckFree is a program (and a company) that allows you to pay your bills online. As the name suggests (you're free of checks -- get it?), you no longer have to write out paper checks. You pay a monthly fee to the company (currently $9.95 per month for up to 20 payments), download the software from the CheckFree website, install it, and it walks you through getting set up.
You may have been using CheckFree already for several years, in which case you're familiar with it. But you may be surprised to discover that there is a better deal around, using -- guess what? -- CheckFree.
Quicken and Microsoft Money
These popular programs allow you to track, check, and categorize your various accounts -- from checking accounts to credit card accounts to loans and investments. Using the data you enter into the program, you can also prepare budgets and generally get a much clearer picture of the state of your finances.
What's more, the programs are also capable of hooking you in to your online bank. The way Quicken does this, though, is through CheckFree. You may never see the CheckFree interface -- as a matter of fact, you generally don't -- but that's how your transactions are being transmitted. Because your financial information is being automatically updated and entered into your Quicken register, you've saved yourself a step, come tax time, of trying to import from one program (the CheckFree standalone) to another (the personal finance program).
Surprising, perhaps, is the fact that it's cheaper. Many banks now offer unlimited payees at $5 or $6 a month, as compared to the CheckFree standalone deal. You do da math, Fool!
If you don't have Quicken or Microsoft Money and you want to remain with your current bank, they may well offer online banking. They will then function as an Internet bank for you, but you still have the convenience of a local bank branch. You can access your account information and pay your bills through the Internet. There is a charge for this, which is generally about the same that you'd pay to access your account with Quicken or MS Money -- around $6 a month.
The features offered are essentially the same, except that you don't have the convenience of automatically importing your financial data into your personal finance program.
The alternative to using your current bank online is to go with an Internet-only bank.