Online banking is offered by most banks and is usually very inexpensive or even free. Online banking makes bill paying very easy. This is very convenient if you pay several bills at a time. You can pay all of your bills at once regardless of their due date. Then you don't have to worry about mailing your payments out at different times during the month. It's also a great tool for payment verification and to monitor spending.

The payments are made by check or electronic transfer. You should schedule your payment at least 5 business days before the date it is due to make sure that the company receives it in time. In addition, there are several anti-fraud mechanisms to insure that your account is secure and confidential. All of your account information is encrypted and it's highly improbable that anyone would be able to decode your information. There are also computer programs available for purchase that can help you manage your funds such as Quicken, Check Free, and Microsoft Money, for example.

You may even want to consider opening an account with an online bank. These banks can only be accessed through the internet. They are cheaper than branch banks and charge fewer fees. One disadvantage though is the ATM usage fee that other banks will probably charge you.

Before you open any bank account, be sure to investigate all of the bank offers and inquire about any fees that you may be charged.

Additional Resources:

Online Banking: A Definition

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• Online Banking is a system allowing individuals to perform banking activities at home, via the internet. Some online banks are traditional banks which also offer online banking, while others are online only and have no physical presence. Online banking through traditional banks enable customers to perform all routine transactions, such as account transfers, balance inquiries, bill payments, and stop-payment requests, and some even offer online loan and credit card applications. Account information can be accessed anytime, day or night, and can be done from anywhere. A few online banks update information in real-time, while others do it daily. Once information has been entered, it doesn't need to be re-entered for similar subsequent checks, and future payments can be scheduled to occur automatically. Many banks allow for file transfer between their program and popular accounting software packages, to simplify record keeping. Despite the advantages, there are a few drawbacks. It does take some time to set up and get used to an online account. Also, some banks only offer online banking in a limited area. In addition, when an account holder pays online, he/she may have to put in a check request as much as two weeks before the payment is due, but the bank may withdraw the money from the account the day that request is received, meaning the person has lost up to two weeks of interest on that payment. Online-only banks have a few additional drawbacks: an account holder has to mail in deposits (other than direct deposits), and some services that traditional banks offer are difficult or impossible for online-only banks to offer, such as traveler's checks and cashier's checks.
  
  Source:http://www.investorwords.com/3420/online_banking.html

Online Banking: Is It for You?

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• Online banking is for you if it will save you time and/or money.
  
  You're the ideal candidate for online banking if you a) are online already, b) have more than just a few bills to pay, and c) already use a personal finance program like Quicken or Microsoft Money. If one or two of these apply to you, then you're still a pretty good candidate.
  
  There are three aspects to what is broadly called 'online banking,' otherwise known as PC banking, Internet banking, home banking, or electronic banking. First is the fact that you can shop for interest rates online (not just interest rates for your interest-bearing checking account, of course, but also for such things as home loans or car loans).
  
  Then, beyond finding your best interest rate, there are concrete services offered online that can benefit you in tracking and managing your bank account: account viewing and online bill paying. The former indicates that you can access your account online to see your transaction history and account balance. The latter offers, in addition to that, the ability to pay your bills online and have your register updated and the data automatically imported into programs such as Quicken or MS Money.
  
  There is also the distinction between banks that are wholly on the Internet and for which no special software is needed (such as Net.B@nk and Telebank) and the traditional banks that have added the option to bank from home via special software.
  
  Are you online already?
  
  Umm... well... you're reading this, right? So it's a pretty fair guess that you are. This means you don't have to jump through any hoops in terms of getting a computer, figuring out what a modem is and whether or not you have one, getting an ISP or using AOL, etc. You already know all that. If your current bank has a website and the ability for you to view your account, you may be just an instructional phone call or a mouse click away from viewing your account online already.
  
  How many bills do you pay each month?
  
  If it's only two or three, then it may not be worth your while to get set up for online banking. If however, it's more like 20, then you're a prime candidate. Once we're talking paying rent and/or mortgage, the utility company, the garbage collector, your VISA bill, the local phone company, the long distance phone company (and possibly a separate cell phone), the cable company, one or two student loans, a car loan, the water bill, and the newspaper delivery -- well, think hard about doing your banking online. There is great joy in not having to write your account number by hand on so many checks, put stamps on so many envelopes, or write your return address over and over. Banks offer these services for varying rates, but a reasonable rule of thumb at present is that you'll pay around $5 a month. If you send out 20 bills a month, you're saving over $6.00 in postage right there -- so you're already ahead. If, in addition, you're saving yourself time and getting that extra pleasure from not wasting energy in the humdrum of irritating tasks like licking envelopes, it's a no-brainer: you should be banking online.
  
  Do you use Quicken or MS Money?
  
  If you already use one of these programs, you're way ahead of the game. You already know most of what you need to know. In addition, your bank will (most likely) be able to update your register on your hard drive -- automatically -- each time you use it. This is, as the saying goes, way cool. You simplify and automate your bookkeeping and make tax time less painful. You pay your bills with a minimum of effort. You save money.
  
  Is your time important to you?
  
  Well, all right, you caught us asking a leading question. Everyone's time is important. But we state it here because it's something to think about: an investment of time up front may pay handsome dividends down the road. (It's just like investing in stocks, right? You know, "time is money" and all that.) Even if you're not online and you don't use Quicken or MS Money, you may decide that taking the time now to get set up for the future will be worth it.
  
  Source:http://www.fool.com/money/banking/banking08.htm

Wikipedia: Online Banking

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• Online banking facilities offered by various financial institutions have many features and capabilities in common, but also have some that are application specific.
  
  The common features fall broadly into several categories
  
  A bank customer can perform some non-transactional tasks through online banking, including -

  • viewing account balances
  • viewing recent transactions
  • downloading bank statements, for example in PDF format
  • viewing images of paid cheques
  • ordering cheque books
  
  
  Bank customers can transact banking tasks through online banking, including -
  • Funds transfers between the customer's linked accounts
  • Paying third parties, including bill payments and telegraphic/wire transfers
  • Investment purchase or sale
  • Loan applications and transactions, such as repayments of enrollments
    • Financial institution administration
    • Management of multiple users having varying levels of authority
    • Transaction approval process


Some financial institutions offer unique Internet banking services, for example
Personal financial management support, such as importing data into personal accounting software. Some online banking platforms support account aggregation to allow the customers to monitor all of their accounts in one place whether they are with their main bank or with other institutions.
Source:http://en.wikipedia.org/wiki/Online_banking