by Kelly Clark

Created on: July 23, 2008   Last Updated: August 11, 2008

The Internet has already revolutionized the way that people shop, communicate, work, and travel. Now, it is changing the way people bank. Some keep it close to home and use the basic online services provided by their local bank while others take it a step further and open an online-only bank account. Both avenues can make banking easier, more efficient, and even financially rewarding. In spite of this potential, many people hesitate to take advantage of online banking and bill pay over concerns about security and identity theft, but banking online has never been safer or easier than it is today.

Whether you ultimately decide to start taking advantage of online banking via a traditional or online bank, security is a concern-but probably not as big a concern as you think. Each bank's computers are behind the protection of a firewall, and data is transferred securely via SSL encryption. Another thing to keep in mind is that banks are even more aware of the potential vulnerabilities of banking online than you are, and as a result, they take extra security precautions. No means of banking will ever be 100% safe, but online banking allows it's users to access their accounts without the need to use paper checks, or expose information by visiting a branch where account data is viewed by employees.

For most people, the biggest hurdle to switching to an online-only bank account is the perceived disadvantage of not having access to a brick-and-mortar bank. However, that disadvantage may be outweighed by the perks. Lower overhead for the bank translates to a higher annual percentage yield for you. Shop around using a website such as bankrate.com, and you can find online checking and savings accounts that pay interest on par with your traditional bank's rate for a CD! With the magic of compound interest, those small differences in APY can really add up. In addition to savings and checking accounts, online banks frequently offer CDs, IRAs, and money market accounts. Before opening an account, do your research-find out if the bank is FDIC insured, when and how customer service is available, what types of accounts are offered, and most important, how you will access your money.

If the idea of banking with a business that you can't see outside of a computer monitor is a little hard to stomach, you might consider investigating the online banking functions offered by your current bank. While online banks generally offer the most advanced online banking functionality, many brick-and-mortar

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