How can online banking help me manage my credit?

Credit Management with Online Banking

Accessing a credit card account online makes it much easier to manage your debt. For one thing, you can check your statement at any time instead of waiting for a monthly statement to be mailed to you. Monthly paper statements can lag weeks behind current activity on the account, so online access gives a much better indication of day-to-day use.

If more than one member of your household has a card on the same account, you can check online to see who has been using it and how much they've been spending. Some credit cards allow you to set limits on individual cards to control spending, especially helpful if the other card-holder is a son, daughter or other dependent.

Online banking also makes it easy to see how much interest you're being charged each month. When you log in to make a payment, you can check how much of the payment is pure interest and how much will go toward paying down your balance. To reduce debt, you'll want to pay more than the minimum monthly payment.

Looking at online statements (both checking accounts and credit cards) will allow you to make a formal budget. Some banks have built-in budgeting programs, and others will offer a breakdown of where you spend your money each month. That makes it easy to see how much of your budget is going to restaurants, shopping malls or to pay for gas, and you can structure your new budget to make savings where necessary.

One way that credit cards make extra money is by charging you late fees. You can avoid these fees -- which might amount to $30 or more each time you're late -- by setting up automatic payments. You can do this whether your credit card was issued by your primary bank, or if it came from a bank separate from your checking account. Your credit card's payment page should give you the option to set up a recurring monthly payment. After you select that option, you'll be asked to enter information about your checking account, usually your account number and your bank's routing number. You can find these on a check or on your bank's Web site. You can set a specific day of the month for the payment to occur -- make sure you set it so that your creditors are paid on time, and be sure that your checking account has enough funds to cover the payment.

How can credit reports help you manage debt? Find out on the next page.