COMPUTING YOUR MONEY
1. It’s 2001, banks are closing branches, how can I run my finances online?
It is surprisingly easy. I love banking online. It puts you in control, it saves money, and some of the best deals in savings and credit cards can only be done over the net. You can also use the internet to find the best rates on savings, loans, cards and so on.
2. Hang on. Can I start with a simple bank account?
Sorry. Got a bit carried away. Yes. Some banks, Barclays is an example, will let you run any of its bank accounts over the net. Others – like first-e and the Co-op’s Smile – are only available over the internet. Newcomers like cahoot from Abbey National and IF from Halifax are mainly internet but can be operated over the phone as well.
3. What is the advantage of banking online?
First, it saves you money. These new internet bank accounts pay you decent rates of interest on your current account balance – the top four pay between 6.5% and 4.75% on your current account balance. Barclays just sticks with its basic 0.1%. That could make you £20 or £30 over the year. Against that, depending on your internet deal, you will have to pay the cost of the phone calls while you are connected.
4. What if I go overdrawn?
Banks want us online – it is cheaper for them. So they will usually offer better deals on overdrafts as well. Online overdrafts can be half the cost of a traditional bank account.
5. How do I open one?
Normally you apply for the account online. That means you must have a computer and an internet connection. You log onto the website of the bank you have chosen and will be asked for the usual personal and financial details, and for a password and other information which only you will know. You will then be sent by post a form to sign and send back – old-fashioned but it’s the law – and then you are banking online.
6. What can I do online?
Once your identity has been confirmed then you can see your balance, list all the transactions to date, move money from one account to another, and pay bills electronically. If you open a credit card account then you will be able to see your balance, pay all or part of it, and generally be completely in control of your finances.
7. What about security?
When you send your details over the internet you will see a security notice come up on your computer. Once you have passed that, everything sent to and from your computer is ‘encrypted’ – turned into a code so anyone intercepting your messages would just see gobbledygook. Only the bank can decode it. Some older versions of Windows and older internet browsers may not be secure enough. If so the bank will not let you operate the account until you upgrade.
8. I don’t understand how it works, so how can I be sure it is safe?
Modern internet browsers have reasonable security but if you worry about these things you can upgrade free to what is called 128-bit encryption – so secure that until recently it was counted as a military secret by the US government. No-one knows if it is unbreakable or not – and it probably allows the US secret service in by the back door – but if you have an ordinary account with hundreds rather than hundreds of millions in it, and you are not involved in organised crime, then no-one is going to bother trying.
9. Very mollifying. But haven’t all the banks had serious breaches of security on their internet sites?
Most of them have had well-publicised occasions when personal files have been visible to someone else without code-breaking. But that has not allowed anyone else to operate accounts. And even these instances have been very rare. I run my accounts over the net and never worry about security at all. But I did upgrade to 128-bit encryption!
10. OK. How do I find the best account?
Use the internet! There are hundreds of websites with financial information and some excellent ones you can use to compare and contrast accounts and find the deal that suits you best. You cannot rely on any one site to have all the deals on it. So go to two or three and compare the comparisons – my favourites are listed at the bottom of the page. Using them you can find a current account that pays 6.5% on your money and charges just 8% on an overdraft and a credit card that charges you 0% on your shopping. Both operated over the internet. Find them for your New Year quiz!
Webwatch
www.moneyfacts.co.uk - impartial comparisons with no adverts
www.moneyextra.com - comprehensive commercial information and comparison service
www.find.co.uk - links to more than 5000 commercial financial websites listed by category.
www.bbc.co.uk/moneybox -- the Radio 4 Money Box website
13 January 2001
e-mail Paul Lewis on paul@paullewis.co.uk