Online Banking is Booming

Online banking is booming with 68% saying they conducted the majority of their banking on the net last year compared to just 18% in 2005, new research from Lloyds TSB Internet banking reveals.

Meanwhile, over half of those surveyed (57%) say they've used Internet banking more often this year than last year with just 11% stating that they never manage their money online.

The real surprise however is the 70% of over 50s who now claim that Internet banking is their preferred method of money management. Conversely, younger people aged between 18 and 25 are the least likely to manage their money on the web - 36% preferring to use their telephone or to go into their local branch.

The main reason respondents gave for banking online, cited by 54%, is that the service is available 24 hours a day, seven days a week. 21% like the convenience of being able to manage their money wherever they are.

Generally speaking, Internet banking users are clued up about the things they can do online, including checking their balance, paying their bills, searching their statements and transferring money between accounts. However, a quarter were unaware they could set up and cancel direct debits and standing orders online.

Of the one in ten who don't currently bank online, the main reason given was that they don't see the need and are happy with the way they bank now (43%).

Customers Want Better Online Banking Security

A poll conducted by RSA, the security division of EMC, suggests that online banking customers are becoming more concerned about security issues, and would like banks to take more steps to combat fraud.

RSA's Financial Institution Consumer Online Fraud Survey was conducted in December and polled 1,678 adults from the US, UK, Germany, France, Spain, Australia, Singapore and India.

The survey suggests levels of trust in online banking are falling - with 52% of respondents saying they were less likely to sign up for online banking as a result of the fraud threat, such as the recent online 'heist' which hit Swedish bank Nordea.

Also covered were....

Phishing - the good news is that more customers are now aware of the threat of phishing, though some still don't know what it is.

* 38% knew what phishing was
* 29% were aware of the term but didn't know what it means
* 33% were unaware of the term
* 82% were less likely to respond to bank emails as a result
* 52% were less likely to sign up for or use online banking due to the threat of phishing

Customer identification measures - more than half of customers would like tougher measures.

* 69% would prefer stronger identification than the standard username and password
* 91% would be willing to use a new, tougher method

Bank transaction monitoring/authentication - customers would like their banks to monitor transactions and look out for any suspicious activity.

* 82% believe their bank should monitor their account
* 74% would like their bank to use risk-based authentication

Though this is a relatively small sample, it's clear that the public is concerned about online fraud, and the best response is to make people aware of the threats, as well as taking tougher security measures to reassure customers.

15 Credit Card Terms You Must Know

If you don't understand the language, credit card offers and statements could lead you to deep debt -- or at least furious frustration. For the big scoop on the fine print, here's what these frequently used credit card terms mean.

Average daily balance -- This is the method by which most credit cards calculate your payment due. An average daily balance is determined by adding each day's balance and then dividing that total by the number of days in a billing cycle. The average daily balance is then multiplied by a card's monthly periodic rate, which is calculated by dividing the annual percentage rate by 12. A card with an annual rate of 18 percent would have a monthly periodic rate of 1.5 percent. If that card had a $500 average daily balance it would yield a monthly finance charge of $7.50.

Annual percentage rate (APR) -- A yearly rate of interest that includes fees and costs paid to acquire the loan. Lenders are required by law to disclose the APR. The rate is calculated in a standard way, taking the average compound interest rate over the term of the loan, so borrowers can compare loans.

Balance transfer -- The process of moving an unpaid credit card debt from one issuer to another. Card issuers sometimes offer teaser rates to encourage balance transfers coming in and balance-transfer fees to discourage them from going out.

Cash-advance fee -- A charge by the bank for using credit cards to obtain cash. This fee can be stated in terms of a flat per-transaction fee or a percentage of the amount of the cash advance. For example, the fee may be expressed as follows: "2%/$10". This means that the cash advance fee will be the greater of 2 percent of the cash advance amount or $10.

The banks may limit the amount that can be charged to a specific dollar amount. Depending on the bank issuing the card, the cash advance fee may be deducted directly from the cash advance at the time the money is received or it may be posted to your bill as of the day you received the advance. The cost of a cash advance is also higher because there generally is no grace period. Interest accrues from the moment the money is withdrawn.

Cardholder agreement -- The written statement that gives the terms and conditions of a credit card account. The cardholder agreement is required by Federal Reserve regulations. It must include the Annual Percentage Rate, the monthly minimum payment formula, annual fee if applicable, and the cardholder's rights in billing disputes. Changes in the cardholder agreement may be made, with written advance notice, at any time by the issuer. Rules for imposing changes vary from state to state, but the rules that apply are those of the home state of the issuing bank, not the home state of the cardholder.

Finance charge -- The charge for using a credit card, comprised of interest costs and other fees.

Floor -- The minimum rate possible on a variable-rate loan or line of credit, after any initial introductory rate period. For example, on a credit card with the Prime rate as its index, no matter how low the Prime rate drops, the rate on the line may never decrease below the stated rate floor.

Grace period -- If the credit card user does not carry a balance, the grace period is the interest-free time a lender allows between the transaction date and the billing date. The standard grace period is usually between 20 and 30 days. If there is no grace period, finance charges will accrue the moment a purchase is made with the credit card. People who carry a balance on their credit cards have no grace period.

Minimum payment -- The minimum amount a cardholder can pay to keep the account from going into default. Some card issuers will set a high minimum if they are uncertain of the cardholder's ability to pay. Most card issuers require a minimum payment of two percent of the outstanding balance.

Over-the-limit fee -- A fee charged for exceeding the credit limit on the card.

Periodic rate -- The interest rate described in relation to a specific amount of time. The monthly periodic rate, for example, is the cost of credit per month; the daily periodic rate is the cost of credit per day.

Pre-approved -- A credit card offer with "pre-approved" only means that a potential customer has passed a preliminary credit-information screening. A credit card company can spurn the customers it invited with "pre-approved" junk mail if it doesn't like the applicant's credit rating.

Secured card -- A credit card that a cardholder secures with a savings deposit to ensure payment of the outstanding balance if the cardholder defaults on payments. It is used by people new to credit, or people trying to rebuild their poor credit ratings.

Teaser rate -- Often called the introductory rate, it is the below-market interest rate offered to entice customers to switch credit cards or lenders.

Variable interest rate -- Percentage that a borrower pays for the use of money, and which moves up or down periodically based on changes in other interest rates.

Building credit for the first time

I am a recent college graduate and I am beginning to understand how important credit is since I have left school. I have never needed to borrow money or take loans out for school and only recently opened a bank account.

I would like to build my credit history and open some credit cards (unsecured). Can you give me a blueprint for building my credit quickly and to a level where I can open some credit cards and lease a car? Thanks in advance.


----Advice ---

Although it is great that you have graduated from college without any debt, the downside, as you have found out, is that you have not established credit. The good news is that it is much easier to establish credit than it is to pay off the thousands of dollars in debt with which many college students will graduate.

Below is a blueprint for establishing credit and using it wisely.

* Open a bank account. This will not appear on your credit report, but bank account numbers are often requested on credit applications. (You have completed this step.)
* Apply for a credit card. To avoid being denied credit, apply only for those cards whose requirements you are likely to meet. Department store or gas credit cards are usually easier to obtain than a bank-issued card with a Visa or MasterCard logo. Before applying, make sure the creditor reports account activity to the credit bureaus. As the purpose of obtaining the card is to establish credit, you want to choose a card that will help you do that. If you want to get a Visa or MasterCard, ask at the bank or credit union at which you have your account.
* Charge purchases and make payments on time. Use your credit card for purchases and make sure to pay the balance on time. Once you have used the card responsibly for three months, you may want to apply for a Visa, MasterCard, American Express or Discover. These cards will allow you more flexibility in charging purchases, but will also give you more opportunity to get in trouble. Remember a $5,000 credit limit is not $5,000 in additional income. It is only a different way to spend the money you already have.
* Create a spending plan. Before you use your credit card, you will want to make sure that you are able to pay off the balance on the items you plan to purchase. Write down all of your expenses and your income and adjust your spending accordingly.
* A secured card is an option. If you have trouble qualifying for a credit card, you may opt to apply for a secured card. These cards have credit limits based on a required deposit made by you into a savings account. You use the card just as you would any other credit card.
* If denied credit, ask why. Ask any creditor that denies you credit to give you the reasons you were denied. Reasons may include income, employment or credit history. It is important to find out why you are denied because frequent inquiries (applying for credit) on your credit report can be viewed as a negative to a potential creditor. If you are denied credit, you can request a free copy of your credit report to see if there is erroneous data on it, and have corrections made.

Just as important as a blueprint for establishing credit, we need to go over some of the things you don't want to do.

* Don't overdraw your bank account. You will be charged fees and you could damage a good reference.
* Avoid missed or late payments to any creditor. That is a sure way to damage your credit rating.
* Don't let anyone else borrow your credit card, debit card or in any way have access to your bank account. You are responsible for any authorized use of your accounts.
* Don't give your card number to anyone over the phone or Internet unless you have initiated the transaction.