Managing Your Personal Finances on the Internet—
An Introduction to Electronic Financial Transactions

By Remar Sutton, DCU StreetWise Spokesperson

Computers and the Internet allow us to have all of our financial information at our finger tips 24 hours a day, 7 days a week. We don't have to wait for business hours to make transactions. Businesses and financial institutions also benefit. Among many possible activities, you can check account balances, receive statements, pay bills, and transfer money.

This brief introduction provides basic information and some tips on using these services.

Direct deposit is an electronic deposit to your account. The deposit is arranged by you and can be recurring (such as with a paycheck) or one time (such as tax refund). Using direct deposit for your paycheck (or other regularly occurring payment) means no trip to the credit union or bank, no waiting for the check to arrive, and no waiting for the check to clear. Your credit union or bank may offer additional benefits when you use direct deposit. Read more about direct deposit at DCU.

The term online banking generally refers to being able to manage your accounts over the Internet, whether your account is at a credit union, bank, or brokerage firm. Services offered vary for each financial institution. The most common are viewing account information including recent transactions and statements, transferring funds, customer service requests, and paying bills. DCU offers PC Branch.

Many financial institutions offer electronic payment of bills. It works like this. You set up a list of payees, usually choosing from a list of common payees. You may also be able to manually add payees. When it's time to pay a bill, choose the payee from a list, enter the amount and date for payment and then confirm the transaction. You can modify payment timings to meet your needs as well as meet due dates. Using such a program, you may also be able to receive your bill online from some companies. DCU offers PC Branch Bill Payer. In using the bill paying service, you still have to make sure that your payment arrives by its due date. DCU suggests that you schedule your payment 5 to 8 days in advance and input a due date 1 to 3 days in advance of the due date printed on the bill.

Another option for paying bills online is to use Automated Clearinghouse (ACH) Debit. You authorize the payee to make an electronic debit from your account on the due date. You may have to set it up with the company by filling out a form and providing a voided check. Or you may also be able to set it up on the company's web site.

The popularity of online banking means that con artists have been quick to try take advantage of the unwary. "Phishing" scams take the form of an email that looks like it's from a reputable institution that you do business with, such as your credit card company or bank or online retail or auction account or perhaps even (though we've not heard of one yet) a credit union. The email asks you to verify your account information—such as account numbers, passwords, social security number, etc—by clicking on the provided link. The link takes you to a site that looks legitimate. Do not click on any links or use any contact information provided in the email. No legitimate institution asks for this information by email. If you need to contact them, use the information provided on your latest statement.

Financial institutions take security seriously. They know that you won't use a service if you are concerned about its security. Read about the security features for PC Branch.

Here are steps you can take to ensure that your information is secure:

Many web sites ask if you want it to remember your log-on information for that site. Financial institutions may only ask to remember your ID and not your password. This information is stored on your computer in the form of a "cookie". It is not stored on the web site's computer. I recommend that you don't store your password. Internet Explorer will remember IDs and passwords if you let it. I recommend not using this feature at all or if you want to use it for other sites, don't let it remember your financial site's passwords. The reason we recommend that you never store your password or account numbers on your computer is again those scam artists: in this case they create "backdoor" access to your computer to search for your personal information or infect your computer with a virus that digs up that info in order to steal it.

Don't disclose personal information—address, telephone number, social security number, account numbers, e-mail address, etc—unless you know who wants it, why they want it, and what they plan to do with it. Most businesses have no need of your social security number, so be very protective of it.

Always read a site's privacy policy before providing any personal information. Don't do business with a site if you don't agree or like their policies.

Read these articles for more information about these and other electronic financial transactions.

Tips to Safely Conduct Financial Transactions Over the Internet from the National Credit Union Administration (NCUA)

Safe Internet Banking from the Federal Deposit Insurance Corporation (FDIC)

Electronic Banking from the Federal Trade Commission (FTC)

A Consumer's Guide to E-Payments from the FTC

E-Checks (Electronic Check Conversion) from the FTC

If you find this review helpful, please pass the word to your friends. Also email me with any comments or suggestions.

Digital Federal Credit Union
220 Donald Lynch Boulevard
PO Box 9130
Marlborough, MA 01752-9130
508.263.6700 • 800.328.8797