A paper trail in banking can be a chain of printed evidence of where a person has been and how he spent his money. It can show that payments were made, taxes were paid, and plans are well laid in investments and budgeting. Some individuals who are more set in their ways see paper as a literal trail, a way to ensure that nothing is lost and there's always a way to track how money comes and goes. Switching from a paper system to an online, paperless one takes a certain leap of faith and requires some knowledge and planning, but once the switch is made, it's hard to imagine ever going back to paper.
First among concerns may be "is it safe?" This is not just a question for those who bank with paper and a teller. Having a healthy fear of online banking is wise for all ages and income levels, but paper banking actually has its own concerning qualities and outcomes -- identity theft, lost retirement savings and other financial catastrophes happen in both paper and paperless transactions. Many of us have fears about losing money through cyberspace, and for some, cyberspace is as big and mysterious a place as outer space.
Another big question is, "why make the switch?" Is it just a way for the banks to make more money and for the individual to have to adjust to more technology whether they want to or not?
Switching to online banking has many advantages for both the bank and the person using the bank, and it is mostly safe if done smartly. You can save time, effort, trees, gas, space and often, your sanity by having access to all of your funds -- both coming and going -- anytime, anywhere with just an Internet connection and a password -- or seven.
If you're considering the switch from paper to online banking, try easing into it a step at time. We'll take some steps in the paperless direction, next.
Use Direct Deposit
If your employer offers direct-deposit payment, take advantage of it. Getting paid with paper checks usually means waiting to receive them; waiting to clock out so you can drive to the bank; waiting in line at a drive-thru, ATM or teller station; and waiting for the check to clear if deposited during off hours. Then, you have a paper pay stub that may or may not make its way into a file. It's more likely to pile up in a stack of folded paper somewhere in your house, car, purse or work bag until you throw it in a box or drawer with other scraps and duplicates -- all printed with your personal information, including Social Security number, employee number and other valuable data.
Receiving payments direct from a company to your bank cuts out trips to the bank and piles of paper, and you will know exactly when your funds are available -- usually must faster than the other method. Most direct deposit arrangements work pretty flawlessly. You can almost always use your preferred bank and can check online to confirm deposit information, track pay each month and over the year, and have access to all records in one place without waiting for payroll to provide the info.
And if you're not ready to give up on paper entirely, often you can still opt to receive a deposit receipt or pay stub by mail or electronically by e-mail. Direct deposit receipts usually contain a lot less personal information than traditional ones, so they tend to be less of a security risk. Opting out of paper altogether is an option when you're ready.
Do you get some anxiety when picturing or looking at your bill-paying "station?" Maybe half a dining table, most of your desk or even a spot on a living room table has a pile of envelopes, each stuffed with special offers, account notices and unsolicited junk you feel obligated to look through or at least to throw away, but it has to be checked closely and shredded because it has so much personal information.
Imagine never having a bill-paying pile again. Everything from local utility bills to mortgage and rental statements can come straight to you without any paper at all. Bills sent via e-mail arrive as early and as reliably as paper bills -- companies want to be paid, so it's a mostly reliable system no matter the delivery. And registering for e-bills helps ensure that a piece of paper isn't lost somewhere with the postal service or in your stacks of paperwork.
Managing e-bills without paper can be as easy as using the calendar connected to your e-mail, whether Web-based mail like Gmail or an application such as Outlook. An e-bill has all of the information of a paper bill, including due date, amount owed and any interest or outstanding fees, without the junk mail papers and envelopes. You can still use a check and snail mail to pay e-bills, but there is an easier way, next.
Pay Bills Online
It may be a cliché to say that you can "do it with the click of a button," but paying bills online really is that simple. Getting started with online bill paying can take a couple of hours as you set up online accounts, but after that, it takes just minutes to pay bills, log payments and get receipts. Often, there are even two choices in how to pay online:
- Pay through a Web site: You can log on to a utility company, Internet provider, mortgage lender, or other Web site and choose to pay through direct withdrawal from bank accounts or with credit or debit cards. Each account will require a separate log in and password and receipts will either come to you through e-mail or will be viewable in your online account log.
- Pay through your online bank account: This differs from going to each creditor's Web site because you can often log account numbers all within your personal bank account and have funds sent directly, either as they are due or at a set time each month.
When paying bills online, it may seem as if there is no way to track money going out and when it gets to the recipient. However, it actually provides two records of payments that act as a "paper trail" without the paper. Your bank will have a record of payments made and when they were deducted from your account, and creditors also will have an electronic record of your payment history. Both records will be accessible and password-protected, and, if you still want a paper receipt, most transactions are printable to paper or to PDF or other electronic file formats.
Receive Bank E-statements
Bank statements often run several pages to dozens of pages for more complex accounts, and often, even those who switch to online banking keep the paper statements coming. One study showed that even among those who do pay bills or bank online, only about 15 to 40 percent opt out of receiving a paper bank statement, preferring to have it mailed snail mail [source: Laise; Pulliam Weston].
Switching to online banking saves time and eliminates paperwork build-up, but it also can help by doing exactly what a paper bank statement does, but without the paper. Bank statements are available online in their entirety and exactly as they would be printed on paper. These statements can be viewed from within your account, printed as needed and saved as different file formats if you want to download a copy to put on a hard drive or portable storage device.
You can still review your accounts and balance your checkbooks, debit and credit accounts as usual, just without the stacks of paper. Any issues or discrepancies between your accounting and the bank's records can be reconciled in the same way they would be if you had a piece of paper in front of you -- and you will still have a copy of the paper available to access any time, from anywhere you can log in to your account. Some banks even offer waived fees or incentives for switching to online only.
Getting rid of the paper also lowers the risk of having someone get a hold of your account information either through regular mail or through the trash. But there are some safeguards to consider, next.
Organize and Protect E-files
Going paperless doesn't mean going without financial and banking records, it just means going about them differently. And one of the first and most important considerations is doing it safely. Your computer should be equipped with firewall protection and software to protect against viruses and hackers, as well as spyware and popups that open doors to access. Some banks even suggest that you close your Internet browser after logging out of your account as an extra protection against those trying to get into private areas. Your protections along with those built into the Web sites of banks and other account providers offer security on many levels.
Beware of phishing scams outside of Web sites too, where official-looking e-mails attempt to get you to provide information [source: CNNMoney]. A good rule of thumb is to never reply or share any information by phone, e-mail or regular mail with anyone you haven't already done business with previously or have selected and checked out thoroughly.
Organizing files so you can access records and histories also is important. Setting up folders for e-mail billing, payment receipts and statement notices, for instance, provides easy access to amounts owed and billing cycle dates. Printing electronic copies in PDF or PNG files, for example, and filing them in folders by month and year is great for tracking every transaction should you need it for tax or accounting purposes. Backing up all of these folders on your hard drive and through at least one secondary source will ensure no data is lost in a disaster or computer crash. Using software or online accounting and budgeting platforms for coordinating online banking activities is another option for adding functionality, storage and organization.
And last, but also first, being able to access accounts by storing passwords and usernames in a safe and central, easy-to-remember location is important in simplifying online banking.
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More Great Links
- CNNMoney. "Online Banking Tips." CNN.com. 2011. (Dec. 10, 2011) http://money.cnn.com/magazines/moneymag/money101/lesson3/index5.htm
- Federal Deposit Insurance Corporation (FDIC). "Safe Internet Banking." FDIC.gov. July 15, 2010. (Dec. 10, 2011) http://www.fdic.gov/bank/individual/online/safe.html
- Kim, Susanna. "Citibank Breach: 6 Tips to Bank Online Safely." ABCNews.go.com. June 9, 2011. (Dec. 10, 2011) http://abcnews.go.com/Business/citibanks-data-breach-begs-question-online-banking-safe/story?id=13801024
- Laise, Eleanor. "Pushing Paperless: The Pros and Cons." WSJ.com. May 2, 2007. (Dec. 10, 2011). http://online.wsj.com/article/SB117805967311388790.html
- Pulliam Weston, Liz. "Go Paperless for Safer Banking." MoneyCentral. MSN.com. Sept. 30, 2009. (Dec. 10, 2011) http://articles.moneycentral.msn.com/Banking/BetterBanking/GoPaperLessForSaferBanking.aspx?page=2
- Sekar, Anisha. "Green Banking 101: Greening Your Bank Account." Technorati.com. Sept. 3, 2011. (Dec. 10, 2011) http://technorati.com/blogging/article/green-banking-101-greening-your-bank/