Balance your statement

Banking, page 2
by joanna borgione

Jim Johannes, a dean in the UW-Madison School of Business who serves on the boards of two financial institutions, agrees people are legitimately frightened of online fraud. “People are afraid to death that some hacker is going to get into their account and milk their account,” he says. Johannes also pointed to “spyware,” computer programs criminals send via email. “In the minute you respond to it, it creates software on your system that can read every keystroke you have and send it back to them.”

Still, victims of online identity theft lose less on average than those who are hit using traditional paper banking. Online account management allows people to keep a constant watch on their transactions instead of waiting for monthly mailed statements, according to the Better Business Bureau and Javelin Strategy & Research. Identity theft victims who use online banking lose $551 on average, while those who use traditional banking lose $4,543 on average. Paper banking identity theft is as low-tech as removing bank statements from trash cans or mailboxes, while online theft requires extensive computer knowledge.

According to Johannes, Internet banking sites are convenient and fast, with opportunities to complete every transaction offered by brick-and-mortar financial institutions, aside from withdrawing cash. “Every bank that I know of has one of those sites and they are getting very sophisticated and very user-friendly,” he says.

Online banking is also a way to build a steady relationship with current financial institutions for future interactions and services.

“Access to financial services is an incredibly important asset in a young person’s life,” Johannes says.

Johannes suggests opening multiple accounts with multiple financial institutions, making sure these accounts are not the free, promotional services, to show one is serious about finances and intends to invest in the institution’s services rather than just use them. He advises never to overdraw accounts and always pay bills on time to build a high credit score and to qualify for future financial services, such as loans for a house or car. Having a high credit score also saves money in the future with interest rates. These two points are easily managed through online banking services. Also, financial institutions prefer customers to bank online because it helps reduce their costs. Therefore, treating a financial institution well can ensure a quality relationship.

Investing in services can make one’s financial life easier, but be careful to use the services wisely. “If you have a bad credit record because you’ve abused or misused this when you’re a young junior or senior in college or a first year graduate student because you don’t know what you’re doing, you’re going to be five, six years behind the eight-ball,” Johannes says.

Follow these tips to ensure a secure and stable credit report:

Monitor your credit report – Obtain a free yearly credit report from a credit reporting agency - Equifax, TransUnion or Experian - to watch for inaccuracies that may indicate unauthorized transactions. Visit www.annualcreditreport.com for more information.
Pay bills on time – Being just 30 days late on payments tarnishes your record for seven years.
Maintain account records – Keep a constant eye on credit card bills and bank balances to catch illegal purchases or withdrawals.
Do not respond to financial emails – Avoid responding to emails that request financial information. This is a sure sign of phishers. Real financial institutions will contact clients without requesting personal information.
Attend to your mail – If paper balances are mailed from an online account, be sure they arrive on time (if not, it is an indication that someone may have changed the address). Also, shred financial documents to avoid information being taken from the trash.

E-banking is a tool any young professional can use to make financial management easier, more convenient and more secure.

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