Online banking is using the internet and its technology to interact with your bank account. Most online services let you check balances, transfer money, pay bills and buy financial products such as insurance. You could also set up direct debits and standing orders, amend overdrafts or apply for a loan. It's also possible to see all of your old bank account statements.

Such has been the expansion of interest in banking online that most of the main banks now provide it, while many other banks have been set up to operate exclusively on the internet. What’s on offer varies by bank, with some offering only basic features, whilst with others you can do all your banking online.

Pros

• Your account can be accessed at any time of day or night, 365 days a year, doing away with the inconveniences of restrictive banking hours.
• You can pay bills or transfer money between accounts without going into the bank or posting cheques.
• Because online services are cheaper to run, banks also tend to offer higher rates of interest than are available on the high street.

Cons

• Online providers spend millions of pounds each year to ensure the security of their websites but for some potential customers, security remains an issue.
• Making deposits to internet only banks can be trickier – although some have agreements with other institutions, such as the post office, which could allow you to make deposits at their branches.
• With internet only banks you may find there is less personal service and advice to hand.

If you’re comfortable with the idea, online banking could be for you and, like accessing your account via telephone banking, could be just another way for you to be in control of your finances. It is generally very safe, but if you do have concerns about security, you could always try it out by opening a secondary account with a smaller amount of money in it.

You can ask your own bank about registering, or you can shop around to get the best deal. Acceptance is, of course, not automatic, and the process is not totally paperless. At some point you will have to sign an application form and post it to the bank, because the law doesn’t yet recognise electronic signatures. If you do not already have an account with the establishment, you will also be required to identify yourself in some way before being allowed to activate your account.

Shop around – There’s no reason why you have to use your existing bank. Many banks offer smaller charges to online customers.

Look into it – Consider all the charges and account features when you choose a bank. Look into what sort of information you can view online, how well it is presented and how labour-intensive it is to use.

Dummy run – see if you can try out the software before you commit.

Be careful – Keep all your details secret, such as username, account number, PIN and password. Don’t write them down and never send your username and password in response to an email requesting it – it’s likely to be a scam. Online banks would never ask you to do this.

Remote control – You can log into your bank account from any computer, so when using a computer in a public place, make sure no one can see what you are doing, and always make sure you log out completely.