Let's see - first came the ATM, then you could get your bank balance and transfer funds over the telephone and now - now you can do just about anything over the internet that the teller used to do. Is this good, bad or indifferent?

Let's find out.

If you have a computer, internet access and a bank with online capabilities, chances are you've used your computer to check your bank balances. Have you used some of the more interesting features of your bank's internet site? Some banks will now let you view your account balance, print prior month statements, transfer funds and ask questions online. Even better(?), many banks now allow you to pay bills online, but beware of the traps.

Nightmares On Line Street

While doing your banking online does offer some convenience, there can also be some pretty hefty problems, especially if you are new to the game. Let's take a look at some of the nightmares created by online banking that are pushing or keeping would be computer bankers off line.

Double your work, but not your money

While not all banks are online yet, more and more are taking the leap. Unfortunately, many times the leap doesn't always seem to make your life easier.

Many online bill payment options are proprietary - that is, you must go to their site, sign on using the password they gave you (which, by the way, you can never remember), enter the payment data and then send the payment. All of this and you still have to enter data into you checkbook! That's a lot of work.

Using Microsoft's Money or Intuit's Quicken products can solve all of this. Many banks today allow you to enter your data into one of these personal finance programs ('PFP') and then go online to tell the bank to make the payments. You can even download bank statements for easy reconciliation.

If you are currently online and doing double duty, explore your bank's web site to see if the bank's information will work with a PFP. If not, you can always change banks. Bankrate.com has a list of 10 questions you should ask in looking for an online bank and Gomez.com has a site with rankings of the top twenty online banks.

Where has all the money gone?

Picture this - you go to the bank and make a deposit at the ATM. Let's say it is for $5,000 and the receipt shows you have a total of $5,500.00 after the deposit.

You're happy because you can now pay your bills without overdrafting. When you get home, you dutifully enter the deposit in your Quicken 2001 file and then go online to check and be sure you agree with the bank. The only problem is your bank only shows $500.00 cash.

What happened to your $5,000.00?

Don't worry; it's still there. The problem is that most banks don't update their web information in real time - that is when the transaction is made. Generally the data is updated once a day at the close of business.

While annoying, you can't do much about this problem. Just be aware it exists and don't panic when today's transactions don't show up.

What do you mean I have $5,241.98 less in my account!?

People are imperfect and so are most of their inventions - including the web. Hence, sometimes vendors get paid a little more than they should.

In one case, a man was entering his bills online. He entered a payment for $5,241.98 and sent it to the bank. The response was not what he normally received from the bank and he reentered the payment again since the it didn't appear to have been made.

The bank informed him it would be glad to stop the extra payment - for a fee of $25.00. He declined their offer.

Sometimes signals get crossed between your computer and the bank's computer. If you have entered a payment, sent it and received a response that made it appear the transaction wasn't sent, don't believe it. Call customer support at your bank and ask them to track the payment to be sure the payment didn't go through.

But that's what you told me to do...

Many banks are getting into online banking the easy way - purchasing canned software.

When you think about it, this can be a great idea. If the bank buys software that has been in use for a period of time, most of the kinks should be worked out, but heaven help you if your customer support representative hasn't been to training yet.

You can probably guess what happens if you end up with an untrained support representative - the proverbial circle of frustration kicks in. If you get someone on the other end of the line who thinks computers are infallible, heaven help you when you try to tell them any differently. What do you think happened to the poor guy who overpaid his bill by $5,241.98?

This is another good reason to head to Gomez.com and Bankrate.com both sites will give you some insight on what to look for in your own bank's services. If necessary, you can always change banks.

Conclusion

Well, we've given you a flavor of the bad things that can happen with online banking, but we like to be fair. The simple fact is online banking can be very useful.

The ability to search your records for the amount of a missing check, or automatically pay loans or bills can be extremely convenient. Checking your mortgage balance or transferring money to cover the check you're writing tonight is a great time saver - especially at midnight.

Even with all the down sides to Internet banking, it is still a powerful tool - if you know what you are doing. If your bank is going to Internet banking, take the Bankrate.com questions and investigate the bank's new offerings. If you are searching for a new bank, drop in on the folks at Gomez.com. If you don't want to do either, give us a call and we will be glad to help you out.

Have a very Happy New Year.