Twenty-two million adults in the UK used Internet banking on their main current account in 2009, according to UK Payments Administration. Most people use it to check their account balances and statements. The websites are secure and operated by the financial institutions. Here are the advantages and disadvantages in comparison with traditional methods.
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Interest rates on Internet current accounts can be higher because Internet-based operations have cheaper running costs. But this is not always the case, so it pays to shop around. Thisismoney.co.uk provides a comparison of interest rates on Internet-based accounts. As of June 2010, ING Direct Savings offers the highest rate at 2.75 per cent. Skipton Websaver 2 offers the lowest rate at 2 per cent. Thisismoney.co.uk advises customers to be wary of "suspiciously high" interest rates. They may be set high temporarily to attract customers and then dropped. Or they may indicate a risky business model.
Internet banking allows you flexibility. You can log in to your personal account at any time of the day or night--including bank holidays--from any computer connected to the Internet. You also no longer need to travel to your bank or queue for service when you get there.
Many online banks let you offset your mortgage or other borrowings against your current or savings account. This lowers the interest you pay on your mortgage.
Although the risk of falling victim to Internet-based fraud is low, UK Payments Administration advises you take steps to guard against it. Keep your login details and passwords safe and secure. Do not be taken in by criminals phoning or emailing you pretending to be your bank. Do not tell them your login details or password. Also do not be fooled by emails pretending to be from your bank containing a hyperlink inviting you to log in. The link leads you to a bogus website, and when you log in you inadvertently give away your username and password.
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