The OH NO in online banking


KAI RYSSDAL: Online banking is all about convenience. You can pay your bills whenever you want. You don't have to buy stamps. You can transfer money without waiting in line. And for those of us who hate balancing a checkbook, it's an easy way to track your transactions.

Sounds wonderful, but. And there is always a but. There's this rule in personal finance: A silver lining often comes with a cloud.

USA Today personal finance columnist Sandra Block joins us. Sandra, welcome back to the show.

SANDRA BLOCK: Good to be here.

RYSSDAL: Let me tell you why we're calling. We got a listener e-mail in, complaining about his electronic banking. He'd had some debits that weren't processed some withdrawals that weren't processed some and he went to check his balance, had more than he thought he had and shabang he got hit with a fee. So we're calling you to talk about online banking mishaps, the things that can go wrong.

BLOCK: The upside to online banking usually is that you do see mistakes faster than you do in the old way where you'd wait until you got your bank statement, which perhaps wasn't the case before online banking and when you only found out once a month where you stood.

RYSSDAL: Can you get yourself into some pretty easy trouble though, setting up all these automatic withdrawals and transfers that kind of happen without you really paying attention to it?

BLOCK: Oh sure you can. The automatic withdrawals are great in that you will pay your bills on time and you don't have to worry about them. But what you have to be very clear of is that you have enough money in your banking account to cover those withdrawals. And if those withdrawals are coming at the same time that you're using your debit card to buy groceries that you're taking withdrawals from your bank account, you very easily could end up with less money in your account than you need. And the charges for bouncing checks are growing more every year.

RYSSDAL: Oh I know. So they are I suppose faster than regular old going and talk to the teller banking but are they really as fast as advertised? I mean it's not instantaneous by any means is it?

BLOCK: It really depends. It's not instantaneous. I've noticed for example, I have direct and I used to have a credit union that it went into, I switched to a bank and I noticed that my check used to land the day that I got it and now it lands the next day. I have no idea why but that's important to know because if I have checks outstanding I need that money to be there. So yes it's not instantaneous you do need to keep track of these things.

RYSSDAL: Are they allowed to do that? Not credit it 'til the next day?

BLOCK: Most of it has to do with notification. What banks will tell you is this is disclosed somewhere. As long as they've told you, most of these things are legal. Where people get into trouble is that these disclosures are so small or so obtuse that they don't necessarily know what's going on.

RYSSDAL: I'm asking this next question for my mom. My mom's a very nice lady, but she still writes herself out a little check to cash, carries into the bank, talks to her teller, gets the $500 for the week or whatever amount of money it is and does it that way because she doesn't trust electronic banking. How are you feeling about security these days?

BLOCK: You know people tell me that all the time. There's this feeling that if you have your account online, that someone can hack into it and steal your money. What I always tell people when they express those concerns is people can do that anyway whether you have an online bank account or not


BLOCK: All that information is still out there on computers. All that your mom is doing is basically preventing her from seeing what's going on. The idea that somehow people can't hack into your account because you don't have it online is a little misleading because these things go on under the radar a lot. It's not like they keep her money in a vault now and nobody can get at it because she doesn't have an online account.

RYSSDAL: (Laughing) Don't tell her that, you're killing me here. Now I'm going to go have a conversation with my mother and explain that it's really OK.

BLOCK: Or tell her she's still at risk, she just doesn't know it.

RYSSDAL: Sandra Block with USA Today, thank you Sandra.

BLOCK: Thank you.


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