Technology is evolving faster than ever, and as banking and money management becomes increasingly electronic, it's important to understand new capabilities – not only for convenience, but also for security. Electronic banking, which is also known as electronic fund transfer (EFT), refers to the transfer of funds from one account to another through electronic methods. A 2015 study by the Federal Reserve found that 22 percent of mobile phone owners use mobile payments. As electronic banking becomes increasingly widespread, you'll likely encounter instances where it's preferable to make payments or transfer money electronically.
Understanding how electronic banking can be used will benefit you and your finances. Using it to your advantage not only will improve convenience, but can also help you track your transfers and payments. There are three key aspects of electronic banking: automated teller machines (ATMs), direct deposits and debit card purchases.
Most people are familiar with ATMs as a method for withdrawing and depositing money quickly and easily. ATMs give you the flexibility to withdraw cash at almost any time. What you might not know is that many ATMs will also let you transfer funds between your accounts and make deposits, providing the quick and easy convenience of 24/7 banking.
One of the most useful features of electronic banking is direct depositing, which allows you to authorize deposits as well as withdrawals from your accounts. If you are paid regularly, your employer may deposit your paychecks directly into your bank account. Similarly, for recurring bills like mortgages or insurance payments, electronic banking enables you to pay the necessary expenses on a regular basis with ease, and without missing payments.
Debit Card Purchases
In many ways, debit card purchases are similar to credit card transactions. With electronic banking, you can make debit card purchases in person, online or over the phone. It provides the convenience of a credit card, but the money is taken directly out of your linked account and you can't spend more than you have.
Now that you know the benefits of electronic banking, you may want to learn how to manage your finances from your smartphone. Check out our Mobile Banking page to learn more.