Actively managing your accounts ensures that you always know your account balances, even when the true balance may differ from the amount printed on your last statement or ATM receipt. Please remember, your financial institution has no way of knowing about the checks you have written but have not been deposited, or what debit card charges you have made that have not yet cleared. It is ultimately your responsibility to monitor your account activity.
By tracking your deposits, transfers, and withdrawals, you not only reduce your chances of overdrawing your account, you also increase the chances of spotting dubious charges that result from identity theft.
We suggest reviewing your transactions at least once per month to make sure all charges are correct, that all checks you have written have cleared, and to make sure that any deposits were credited to your account. You will want to look closely at every withdrawal, making sure that the transactions were all initiated by you. Performing these simple tasks regularly helps to ensure that you are in complete control of your account.
Most banks and credit unions offer online banking tools that make managing your accounts easier than ever. Online account management is not the only way to effectively manage your account, but there are many advantages that make online banking worth considering. Even if you are managing your accounts online already, there may be features and strategies that could minimize fees and help to organize your bills - all from one convenient online destination.
There are several advantages to managing accounts online:
- Easy Account Access - Rather than waiting for a statement, calling an automated information line or visiting an ATM, online account management gives you near real-time access to your balance and transactions. Just keep in mind that some charges may be considered "pending" for a day or two, giving you an artificially high account balance. If you spend money based on an inaccurate balance, you could overdraw your account. If your account is often close to a zero balance, you will need to closely track your most recent transactions to know your true available balance.
- Electronic Bill Payment - Paying bills online not only saves stamps and envelopes, it helps to reduce the chances that you will miss a payment as the result of a move or trip away from home. Just make sure to discontinue any automatic bill payments before changing or closing your account.
- Custom Alerts - You may set up alerts for common events or situations. For example, you may be able to set up an alert when your balance reaches a certain threshold or as a reminder to pay a bill.
- Exporting Account Information - You may easily export your transactions to a money management program such as Quicken or even to a simple spreadsheet for easy tracking of your income and spending.
- Saving Money - Being organized reduces the risk of missed payments and help to keep your credit score as high as possible - the key to saving money on all types of education and other loans. It's not necessary to manage accounts online in order to be organized, but it can be much easier organizing everything online than with physical folders that could be lost or stolen.
Most banks offer the option of either electronic or paper statements. No matter which type of statement you prefer, remember to save your statements for a minimum of three years - you may need them to document tax deductible education expenses, for financial aid verification, or in the event of a tax audit. If you bank online, make sure you understand your bank's statement archiving policy - if they save statements for just one year, for example, you will need to download the statements periodically and store them yourself. Otherwise, you will likely have to pay a retrieval fee for older statements if you need them later.
Protecting Your Data
One advantage to managing your accounts online is that your financial institution offers data backup and security systems that are much more advanced and fault tolerant than any system we could set up at home. But there are still a couple of potential issues you should understand:
- Security - No matter how well your financial institution guards your data, they cannot force you to choose secure passwords, keep your passwords confidential, keep your computer and documents safe from other people, or to use only trusted computers when accessing your account. Please review the material on preventing ID theft if you have questions about safe computing practices.
- Long-term Backups - If you've ever had a computer crash, you can understand how frustrating it is to lose your work. Most financial institutions keep copies of your transactions and statements online for about one year, but after that you may be on your own. We encourage you to seek ways to back up your information that are more advanced that just keeping a backup copy on your computer. Burning files to a CD is a good idea, especially if you can keep a second copy at another trusted location, like a family member's home. But many of us will forget to burn the CDs regularly, resulting in long periods during which nothing is backed up. There are free services such as DropBox that will back up your data in real time.
There are many data backup solutions that vary in their security and ease of use. We suggest you investigate backup solutions on your own to find one that meets your needs.