The Best Way to Set Up an Online Banking Account

The first part of this two-part series explained how paying your bills online can save you time and money and protect the environment. This article shows how to set up and manage an online account.

While online bill pay is growing in popularity, not even a third of Americans have signed up.

Now, let's look at exactly how you can get started.

Setting up your account

First, you'll need a username and password for your bank's online banking and bill pay center. If you don't have them already, follow the directions on your bank's Web site to set up your username and password.

Then gather your regular bills, log in to your account and navigate to the online banking section, where you'll find a page that allows you to set up payees.

If your bank allows you to receive electronic bills, or e-bills, you can search the bank's list of companies that offer such bills. If you receive bills from any of these companies, you can select the option to cancel future paper bills and have all bills sent electronically to your online banking account.

If you make regular payments to companies that don't offer e-bills -- or if your bank doesn't accept e-bills -- register payees by entering the company's address and your account number in the payee-setup area. Then you can set the amount you want to pay the company and the date you want the bank to draft and send a check for that amount.

Keep in mind that you don't have to schedule recurring payments. You can log in to your online account anytime to pay bills or check balances. You may also be able to sign up for automated e-mails that will alert you a few days before a bill is due or when your bank account balance drops below a threshold you've determined.

Keep your money safe

Keep tabs on your account to make sure you know exactly how much money is in it, and which payments are coming up. And check your e-mail regularly to stay on top of payment alerts and other notifications.

Beware of scams like phishing. This popular scheme involves sending an email that instructs the recipient to update personal information, such as a bank account or Social Security number. The message may appear to come from the recipient's bank, but actually links to a website set up by the scammers in order to steal your information.

You can protect yourself. Never send your account information via e-mail, and don't click on a link in an e-mail from someone you don't know. In addition, use a strong password -- one that is too complicated to guess. (Your birth date or child's name isn't a good password.)

Change your password regularly, and take advantage of every layer of security your bank offers. For example, Bank of America's (BAC Quote) SafePasswill send you a text message containing a one-time passcode. The code expires after you use it to authorize your online banking transaction.

Some criminals still use the telephone to fish for your personal information. As a rule of thumb, don't give out personal information unless you initiate the contact.

After you've paid your first few bills online, use the next statement you receive from each of those companies to see how well the system worked. Compare the date the payee received your money with the date for which you scheduled online payment.

If your bill was paid on time, all is well. But if payment arrived later than you expected, set next month's payment a few days earlier.