FINANCIAL AWARENESS Checking & Savings Accounts Lesson 5: Online Banking – Part 1 Instructor PowerPoint Copyright © 2009, Thinking Media, a division of SAI Interactive, Inc. All rights reserved. The Career Ready 101 logo is a registered trademark and Career Ready 101 is a trademark of SAI Interactive, Inc.

2 What is Online Banking? Online banking is utilizing the Internet to do the same types of transactions that you would do at your ‘physical’ bank location. You can pay bills, transfer money, manage your account online and even make deposits with some online banks. You can also use online banking to research and apply for loans, credit cards and home loans, as well as make investments and setup retirement accounts.

3 Online banking makes it quick and easy to perform your everyday banking needs at home without making a special trip to your local bank or ATM. Online banking gives you access to your account information 24 hours a day, 7 days a week (24/7). Online banking is also known as PC banking, home banking, electronic banking, Internet banking and ‘virtual’ banking among others. What is Online Banking?

4 Today, most large national banks, regional banks and credit unions offer some form of online banking to its customers. There are also ‘virtual’ banks, which do not have a physical building, where all transactions are processed electronically. Online Banking Options

5 Most online bank websites are very user friendly and usually include an online step by step tutorial demonstrating how to use each feature. In this lesson, we will discuss the differences between ‘physical’ bank online services and ‘virtual’ bank services to include the advantages and disadvantages of each. We will also discuss the different services, features and options available for online banking. Online Banking

6 Directions: Read this scenario, then select the best answer to this question. Scenario: Josh has a checking and savings account with a regional bank. He wants to be able to setup automatic bill payments and transfer money from one account to another when needed. Question 1 Which of the following does Josh need to do to be able to bank online? Exercise #1: Online Banking – Question 1 A.His bank must offer online services B.He will need a login and password C.He must have Internet access D.All of the above

7 A ‘physical’ bank is a traditional bank that has an actual building or physical location. Today, most traditional banks offer some form of online banking. At a traditional bank, you have 24/7 access to all of your account information online and can still physically go to your local bank for personal one-on-one service. Online Banking Services

8 A ‘virtual’ bank is an online bank that exists entirely on the Internet. They offer some of the same services as a traditional bank and are governed by federal regulations. Since virtual banks do not have the additional overhead and expenses of a traditional bank, they usually offer higher interest rates and lower fees. Online Banking Services

9 Just like ‘physical’ banks, some online ‘virtual’ bank may not be FDIC certified. One way to know if an account is FDIC insured is to look at the terms and conditions when opening the online account or call the company to confirm. Online Banking Services

10 Online Banking Services Here are some typical online banking services and options: Pay Bills Transfer Money Manage Accounts Make Deposits Other Options

11 Sample Online Banking Screen

12 Directions: Select the best answer to this question. Question 2 Which of the following is a typical service available through online banking? Exercise #1: Online Banking Question 2 A.Pay bills B.Transfer money C.Manage accounts D.All of the above

13 Online bill pay is the most utilized feature of online banking because it saves you time and money. You do not have to spend money on personalized checks and postage and you save time by not writing checks and mailing payments. Online Bill Pay

14 The bill pay online feature enables you to setup automatic payments for recurring monthly bills such as your: Online Bill Pay mortgage/rent, car payment, loan payments or any other set amount.

15 If the bill amount varies, you can also setup to pay these bills on a month-to-month basis. Most online bill pay features are simple to set up and maintain. The website will usually have step by step instructions or an online tutorial to assist you. Online Bill Pay

16 At most banks, the following are the main steps for setting-up online bill pay: Set-Up Online Bill Pay Enter Payee information (creditor) usually includes name, payment mailing address, telephone number and account number. Enter Amount of payment.

17 Sample Adding a Payee Screen

18 Set-Up Online Bill Pay Select Type of payment (recurring or one time) recurring means the same amount at the same time each month and one time is just that, a one time payment. Select Date of payment (if recurring, payment will always be made on the selected day each month). Manage online bill pay (check status of payments, update account information, change, add or delete payments).

19 Sample Scheduling a Single or Recurring Payment Screen

20 Set-Up Online Bill Pay Most online bill pay systems will enable you to enter the bills you want to pay and select the accounts you want to use to pay them. You should only have to enter this information once. You can always make changes or add and remove bills at any time.

21 Set-Up Online Bill Pay If a monthly bill is for the same amount every month (mortgage, car note, etc.), you can schedule a recurring payment. The system will automatically make the payment for the designated amount and time. If the bill amount varies (electric, phone, gas, etc.), you can pay the bill on a month to month basis. After you have entered the bills you want to pay online, you need to schedule the payments.

22 Schedule Online Bill Pay Your creditors will receive your online payment either by electronic payment or check. If the creditor is set up to accept electronic payments, your payment is automatically deducted on the date scheduled from your account and deposited electronically into their account. If the creditor does not accept electronic payments, your bank will issue a check based on your online payment instructions.

23 Schedule Online Bill Pay Payments must be scheduled in the online bill pay system. The date you enter will be the date the bank either electronically transfers the money or writes and mails a check.

24 Schedule Online Bill Pay The bank does not know your actual bill due dates. Therefore, the date you enter needs to meet your bank’s schedule requirements. Most banks require two business days for electronic payments and 5 to 10 business days for mailed payments.

25 Manage Online Bill Pay After setting-up your online bill pay system, you will need to continue to monitor and update the information and add or delete payments. Most online bill payment systems include a payment status screen that shows a list all of your payments and their status -- scheduled, pending or processed.

26 Manage Online Bill Pay If you have payments that vary from month to month such as your utilities, upon receipt of the bill, you need to update the pay amount and date. Some payees (creditors) now have electronic bills, which are electronic versions of your paper bills. If electronic bills are accepted by your bank, the amount and due date will automatically be updated online for you; however, you still want to monitor your account to ensure the information is correct.

27 Directions: Let’s see if you can complete an online bill pay request Question 3 Write the letter of each piece of information in the correct field on the online bill pay screen. Exercise #1: Online Banking – Question 3 (A)One time only (B)11/01/2009 (C)Checking (D)$78.51 (E)Montgomery Electric Company

28 Transfer Money Online Another convenient service of online banking is the ability to transfer money from one account to another. Most online banking services enable you to link all of your accounts so you can manage your account balances and transfer money from one account to another. This enables you to monitor your accounts on a daily basis and move money around to maximize interest.

29 Transfer Money Online Some online banks may limit the number of transfers within a designated time period. When researching online banking services, be sure to find out about all of the regulations and fees associated with the service.

30 Managing Accounts Online Online banking is extremely convenient because you can manage all of your accounts online at any time and anywhere. You no longer have to wait for your mailed bank statement to reconcile and balance your accounts. This information can be accessed at anytime over the Internet.

31 Managing Accounts Online Online banking enables you to view account activity, pending payments, specific transactions, debit card transactions and in most cases track your spending habits. Online banking gives you 24/7 access to your account information where you can check balances and transactions and catch errors or discrepancies immediately instead of waiting until you get your statement.

32 One of the downsides to online banking is the ability to make deposits. If you have to deposit cash or checks, you will still have to make a trip to your local bank location or ATM. With most ‘virtual’ banks, you have to mail your deposit. Currently, direct deposit is the main way to make deposits online. Make Deposits Online

33 However, some larger banks and ‘virtual’ banks now have the technology where you can scan your checks to be deposited and they are processed as an electronic deposit. The bank processes the check images using the Magnetic Ink Character Recognition (MICR) which includes the bank routing number and the account number. This is a financial institution standard which enables checks to be universally scanned and processed electronically. Make Deposits Online

34 Other Online Services If you utilize personal finance software, you can transfer information between the software and your online bank accounts. Many online banks also have the ability to set-up alerts so you can be notified when specific checks clear or when your balance falls below a certain level making it even easier to manage your accounts.

35 Directions: Select the best answer to this question. Question 4 Which of the following online banking services enables you to reconcile your account? Exercise #1: Online Banking Question 4 A.Pay your bills B.Make deposits C.Manage your accounts D.Transfer money

36 Directions: Select the best answer to this question. Question 4 Which of the following online banking services enables you to reconcile your account? Exercise #1: Online Banking Question 4 - Answer A.Pay your bills B.Make deposits C.Manage your accounts D.Transfer money Answer C.You can reconcile and balance your account at any time.

Lesson 5: Online Banking – Part 1 END OF LESSON NEXT SECTION LESSON 5: ONLINE BANKING– PART 2