How to Avoid the Perils of Online Banking
8 tips to prevent careless, sometimes costly, mistakes
There are times — many, in fact — when I love online banking.
Then there are other times when I find it so frustrating — and costly — that I think maybe I should pull the virtual plug. That’s because I make careless mistakes in paying my bills.
Maybe you do, too. If so, I’d like to spare you some of the same pain, so I’m here to offer tips to help you avoid similar banking frustrations.
But first: How do I love online banking? Let me count the ways.
What I Love About Online Banking
First, there’s the ease of being able to check my balance at any time of day or night on my computer or smartphone. I also adore online banking’s simple bill-paying features. At one sitting, I can arrange my payments and schedule them for different days, often weeks in advance, closer to the due dates.
And just last week, my bank launched a mobile phone app that lets me deposit a check simply by taking a photo of the front and (after I endorse it) back. Zap, zip and it’s done.
What I Don’t Love About Online Banking
What’s not to love about online banking? Unfortunately, I’ve learned the hard way that it can sometimes be my nemesis. Three examples:
The forgotten click. Once, in my rush to complete a batch of electronic payments, I neglected to click the “schedule payments now” button. I discovered the error when the next batch of bills came due — with outstanding balances and penalty fees. (Fortunately, I got the fees waived after explaining the error; but if I made this faux pay again, I don’t think the companies would be so accommodating.)
The water torture. A few months ago, our public utility notified us that they were about to cut off our water since we hadn’t paid our quarterly bill. Turns out I’d entered the date for a month after it was due, so the payment failed to arrive.
Unfortunately, I didn’t open the notice until 5:15 pm. on a Friday, after the utility’s office closed. So I nervously sweated out the error over the weekend. When the office opened on Monday, I went there to pay my bill.
Beyond my blues — Verizon. Once I sent my electronic payment for Verizon Wireless to my Verizon landline account. I discovered the mistake when the next Verizon Wireless bill arrived past due and with a penalty. I quickly paid up and asked Verizon to return my money from the landline account, but the company said I had to wait 60 (!!) days to get it. Grrr.
Those mistakes are nothing compared to a friend who sent her health insurer $254,600 electronically for a $254.60 bill. You guessed it: she misplaced a decimal point. Fortunately, the insurer caught the mistake, notified her and never deposited the money. Still, the thought that it could have prompted both of us to have all sorts of nightmarish thoughts of bounced checks, overdraft fees and penalties.
Which is why I’m writing this column, hoping to teach myself, and you, valuable lessons.
Ease of Making Mistakes
As Nessa Feddis, a senior vice president at the American Bankers Association, notes, “it is very easy in this electronic world to get caught up and move quickly, hit the send button before we mean to. We all need to take time, pause — and make sure the transaction is accurate.”
The odds of a making mistake are small, says Sol Nasisi, president of the bank-comparison site Bestcashcow.com. Generally, about 0.18 percent of online bill payments are challenged for mistakes. (That number, of course, doesn’t include the ones consumers catch and deal with on their own). But 0.18 percent translates into millions of flubs when you consider that are billions of online payments each year.
How Banks Can Help
Nasisi and Feddis say banks can often help sort out the mistakes, especially if payments never arrive but the bank’s records show they’ve been made.
“That’s the easy one,” says Nasisi. “Banks will get on the phone to help resolve the issue. The harder task is unwinding the error if a customer sent the wrong amount or paid the wrong person.”
That’s why Feddis advises consumers who’ve made an online banking mistake to contact the company that received the money and try to work out a solution. It’s not always easy. Nasisi says some firms — notably mortgage companies — often balk at refunding money, “reluctant to relinquish the cash once they have it.”
8 Tips to Avoid Problems
Here are eight more tips from Nasisi and Feddis to avoid online banking snafus:
1. Pay attention to what you’re doing. Don’t pay bills at midnight after a long day or while chatting with a friend or when you’re also trying to make dinner. Make your transactions when you’re wide awake and not distracted.
2. Make sure you can read the electronic screen. To avoid entering the wrong number or a misplaced decimal, enlarge the font if you need to and if your online banking system lets you.
If you can’t read your mobile phone’s screen or often make typos with its keyboard, use another device with a larger screen and keyboard to make payments.
3. Start slowly. If you’re new to online banking, or your bank offers new electronic payment features, begin by conducting only a few transactions at a time. That way, you’ll get accustomed to the process. Increase your transactions as you get comfortable.
4. Simplify your payment screen. If you’ve been banking online for years, odds are you have some old accounts on your bank account’s payment list. Delete them if you no longer need them. That reduces the clutter and the chance that you’ll click on the wrong account.
5. Set up automatic payments. If you know you’ll owe the same amount to the same company every month (for, say, your mortgage or car loan), arrange to have the payments sent automatically at the date you specify. Similarly, if you’re willing to cede control to your lender, you can ask it to initiate the payment and debit your account.
Just be sure to stay on top of your checking account and ensure you’ll have enough in it when the debits are made.
6. Slow down. Review your transactions for accuracy when you enter them and then again just before you click “send.” You may also want to print out or email the transactions to yourself before finalizing them to be certain the decimal places are in the right place.
7. Sign up for your bank’s email alert system if it has one. This way, you’ll be notified when your payment is made. While the alert won’t prevent a mistake, it may help you catch one sooner.
8. Monitor your online account regularly to make sure it’s correct. Do this at least monthly (when your bank statement comes in the mail or online). Feddis also encourages online banking customers to keep an old-fashioned paper ledger or register to help spot any questionable transactions or mistakes.
Online Security Concerns
Finally, be careful about your online security when you bank online. Hacks happen.
In 2011, for example, more than 360,000 Citibank accounts were hacked accounting for more than $2.7 million in losses. (Fortunately, U.S. banking rules limit a consumer’s liability for fraud to $50 in these cases; many banks waive even that liability.)
So, make sure your computer has the latest virus protection; don’t access your account from a public wi-fi system and change your passwords regularly.
And watch out for emails from what looks to be your bank; they could be phishing scams from con artists trying to gain access to your bank-account information. When in doubt, contact the bank.