Don't Break the Bank: A Student's Guide to Managing Money (15 page)

Online-Only Banks

Recently, there’s been a trend of a new type of bank cropping up. These are online-only banks (also sometimes called virtual banks). As you can probably guess, these are banks that operate solely online and don’t have any physical bank locations. If you already do most of your banking online and are comfortable banking in that way, a virtual bank may be a good option for you. Because these banks don’t have the expenses of maintaining buildings, they may offer better interest rates and other perks.

Online Bill Paying

You can use a site or service like       
PayDivvy.com
that allows you to pay a lot of different bills online from one place. The site also has a cool feature in that it helps you gather payment for bills you are splitting with other people (say, if you and friends are throwing a party together and splitting the costs or if you have a roommate and you want to divide up the cable bill).

You may be able to do this right through your bank’s online banking site. Some banks allow you to enter the information of the place you want to pay and then that amount is automatically deducted from your account and sent to the recipient. You may also be able to set up recurring automatic payments—say, if you want to pay a certain amount every month to that same place.

In other cases, you may need to go to the site of the place you want to pay. Lots of places offer online bill paying these days, including utility companies, hospitals, and department stores. You log into the site (after setting up an account) and enter your credit card or checking account information. Again, you can usually also set up automatic recurring payments. For example, if you want to make sure your phone bill is paid every month without having to worry about it, you would set up a recurring payment so it is automatically taken from your bank account or charged to your credit card every month.

The advantage of online bill paying is that it is quick and easy. You don’t need to worry about your payment getting lost or delayed in the mail, which could result in late charges. One thing to keep in mind, though, is that you must make sure the money is available in your account (or you risk overdraft charges and/or declined payments). This is especially true for automatic recurring payments. Be sure you know how much the bill will be, so you can make sure you have enough money in your account to cover it.

Safety First

One big concern that is common when it comes to online banking is the issue of security. Generally, online banking is considered pretty safe. The major banking institutions spend a lot of money on security features and safeguards on their site to protect your information.

However, as with anything you do online, there is always the risk that something unexpected could happen. Even a few major retailers have had incidents where customer information was stolen or at least at risk.

Another issue is the possibility of a security flaw on your end, that is, if your computer has been infected with spyware or a virus that could allow someone else to view or record your banking activity (and other things you do online).

Watch Your Account Activity Closely

It’s important to keep a close eye on your bank accounts and debit/credit card accounts online (perhaps even getting in the habit of checking them on a daily basis). This way, you can quickly spot any signs that something may be wrong. Look for any purchases you didn’t make or charges that don’t look familiar to you. Don’t overlook small charges—scam artists will often test the waters by making a small charge first, just to make sure the card is valid and working before moving up to attempting larger charges.

If you do spot something fishy, contact your bank or card company immediately. The company can cancel your card so that no other charges can be made. In most cases, you won’t be responsible for any unauthorized charges made to your card as long as you notify your bank right away.

Identity Theft

Another security concern that you need to keep in mind is identity theft. This is when someone steals your personal information and uses it to open accounts in your name or use accounts you already have.

Identity theft can happen in lots of ways. Scammers may get a hold of your information online, or they can use an old-school tactic like going through your trash to find your account statements.

Protect Yourself

You can protect yourself by following these simple dos and don’ts, courtesy of Dollar Sensei (http://www.dollarsensei.com/TSAC/detectandprotect.htm#identitytheft_detect):

•
Don’t
share your Social Security Number unless you have to. Keep your card in a safe place, but not in your wallet.

•
Don’t
share your PINs and computer passwords or leave them out where others can see them.

•
Do
copy every card that’s in your wallet. That way, if it’s lost or stolen, you’ll have a record of who to call.

•
Do
follow the ten steps below for how to handle a lost or stolen wallet.

•
Don’t
throw your statements and other financial information in the trash. Shred them first.

Ten Ways to Protect Yourself from Fraud and Identity Theft

To help prevent fraud and identity theft, Wells Fargo recommends these 10 tips for young people:

1.
Forward It:
The Better Business Bureau recommends having sensitive mail sent to a permanent address such as a parent’s home or a P.O. Box. This should include all financial and medical information, which may contain confidential details. Ask if a paperless statement is an option so you can access account information online instead.

2.
Don’t “Over Share” It:
Social media is increasingly popular, but it’s a good idea to keep personal information private. Fraudsters can use personal information such as birth date, mother’s maiden name, and pet’s name, to help gain access to an account. Also, it’s a good idea to keep other information private such as mobile and home phone numbers; e-mail addresses; and dorm, apartment, and home addresses.

3.
Doubt It:
Use a healthy dose of skepticism if someone claiming to be from your bank or another legitimate company calls, texts, or sends an e-mail asking for personal information. Never click on links sent in unsolicited e-mails from strangers.

4.
Sign Up for It:
Consider signing up for online and mobile banking. This will enable you to monitor your accounts regularly, when it’s convenient for you. Research has shown electronic banking is the quickest way to detect account fraud. Many financial service providers offer online and mobile banking.

5.
Ask for It:
Ask your financial services provider if it offers alerts, which can quickly detect unauthorized use of a bank account. Customized alerts can also be set up in advance. Alerts can be sent to an e-mail address or mobile device based on criteria you select, such as when an account balance drops below a certain amount or your credit card is charged more than a certain amount.

6.
Lock It:
Secure your laptop and desktop computer with a password, firewall, and anti-virus software so no one else can access your files and with a desktop cable lock so no one can remove it. For your mobile devices, be sure to use the keypad lock or phone lock function when they are not in use. These functions password-protect your device so that no one else can use it to view your information. Also be sure to store your device in a secure location.

7.
Shred It:
Use a shredder and shred all unwanted credit card offers, insurance or loan applications, bills, credit card receipts, and documents that contain your personal information. Thieves steal information from many sources, including the mail and even garbage cans, and can use it to help gain access to financial accounts.

8.
Protect It:
Consider using a room safe, or secure online safe for copies of important documents. Be sure to keep any credit cards and documents that contain personal information—such as a passport, a Social Security Card, and your bank statements—locked up when not in use.

9.
Hide It:
Never leave a wallet or purse in plain sight in a dorm room. The same goes for documents with personal or account information.

10.
Learn More About It:
Ask your financial services provider what other services it offers to protect your personal and account information.

Watch Out for Phishing and Online Scams

You must be careful and always have your guard up when you do almost anything online, but especially anything involving your money or personal information. There are a lot of scammers out there who are just waiting to get their hands on your account information. And they can be very clever in coming up with ways to get you to divulge this information.

One common tactic is phishing schemes. Phishing is when a scammer sends you an e-mail (or sets up a pop-up window that appears when you visit a Web site) that appears to be from a bank or other business you trust. The message will often warn that there’s been a security breach with your account, and you must take action immediately or your account will be frozen. The actual story may change, but there is usually a sense of urgency, to try to get you to take action quickly before you have time to think about it.

You are instructed to click on a link that has been set up to appear as if it leads to a trusted Web site. You will then usually see a Web page that looks official—but is actually a fake copy of a real Web page. This fake page is created and controlled by the scam artist. The sole purpose is to get you to enter your login information and other account details, which the scam artists then records so he or she can get access to your account.

How to Avoid Getting “Hooked” by a Phishing Scam

The FTC (Federal Trade Commission) offers these tips to avoid becoming a victim of a phishing scam:

•
If you get an e-mail or pop-up message that asks for personal or financial information, do not reply.
And don’t click on the link in the message, either. Legitimate companies don’t ask for this information via e-mail. If you are concerned about your account, contact the organization mentioned in the e-mail using a telephone number you know to be genuine, or open a new Internet browser session and type in the company’s correct Web address yourself. In any case, don’t cut and paste the link from the message into your Internet browser—phishers can make links look like they go to one place, but actually send you to a different site.

•
Area codes can mislead.
Some scammers send an e-mail that appears to be from a legitimate business and ask you to call a phone number to update your account or access a “refund.” Because they use Voice Over Internet Protocol (VOIP) technology, the area code you call does not reflect where the scammers really are. If you need to reach an organization you do business with, call the number on your financial statements or on the back of your credit card. In any case, delete random e-mails that ask you to confirm or divulge your financial information.

•
Use anti-virus and anti-spyware software, as well as a firewall, and update them all regularly.
Some phishing e-mails contain software that can harm your computer or track your activities on the Internet without your knowledge. Anti-virus software and a firewall can protect you from inadvertently accepting such unwanted files. Anti-virus software scans incoming communications for troublesome files. Look for antivirus software that recognizes current viruses as well as older ones, that can effectively reverse the damage, and that updates automatically.
A firewall helps make you invisible on the Internet and blocks all communications from unauthorized sources.
It’s especially important to run a firewall if you have a broadband connection. Operating systems (like Windows or Linux) or browsers (like Internet Explorer or Netscape) also may offer free software “patches” to close holes in the system that hackers or phishers could exploit.

•
Don’t e-mail personal or financial information.
E-mail is not a secure method of transmitting personal information. If you initiate a transaction and want to provide your personal or financial information through an organization’s Web site, look for indicators that the site is secure, like a lock icon on the browser’s status bar or a URL for a Web site that begins “https:” (the “s” stands for “secure”). Unfortunately, no indicator is foolproof; some phishers have forged security icons.