Like it or not, the world we live in is becoming a virtual one. Everything, including relationships, can now be conducted online. While this may be taking things a bit far for some of us, managing finances on the internet has logical appeal.
Internet-only deals often claim to be better value because the provider does not have to cover the overheads of a large call centre or branch network. Not dealing with call-centre staff, immediate access to accounts and the ability to do everything without leaving the house are some of the benefits. Furthermore, the Fair Investment Company says that paperless billing and switching to bank accounts that do not issue paper statements can reduce carbon footprints.
But there are downsides. For instance, some internet-only companies, such as Swiftcover, the insurer, can be reluctant to give out phone numbers because they want people to run their policies solely online. The threat of internet fraud also means that customers must memorise lots of different passwords and ID numbers, which can be frustrating.
There are some things that must be done in person and, of course, plenty of people prefer face-to-face contact. But if you have had enough of endless phone calls and piles of paperwork, here is our guide to doing (just about) everything online.
Banking
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All the big banks now offer internet banking, and many people seem to prefer it. In 2006 Alliance & Leicester reported that 39 per cent of its new current account business was opened online, while Lloyds TSB said that 68 per cent of customers conducted most of their banking online. Statements, payment of bills, direct debits and standing orders can all be arranged online. First Direct now offers text-message statements.
But there are still some things that need to be done in person, by phone, post or in a branch. For instance, current account applications require postal correspondence, and it is still not possible to pay in cheques online. Most banks also require changes of address to be notified in writing.
Searching for the most suitable current account is best done on one of the many price comparison websites, such as uswitch.com or fool.co.uk, but be aware that they only compare rates, not service.
Mortgages
Comparison sites, such as mform.co.uk, and online broker services, such as Charcol.co.uk, have been around for a while, but Yorkshire Building Society has laid claim to the first completely paperless mortgage application. Until now lenders have been unable to complete loans online because of the need for signatures and verification of identity. The society has replaced signatures with online declarations and can verify identity through a link with Experian, the credit reference agency. Fees can be paid by credit or debit card.
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Savings
Internet-only deals have cornered the best-buy savings market. Rates are, on average, 0.2 percentage points higher than on traditional accounts. For instance, Bradford & Bingley pays 6.4 per cent on its Internet Saver account but only 6.2 per cent on its My Time Postal Saver.
The online savings trend has also allowed lesser-known banks into the market. For instance, ICICI Bank, the second-largest bank in India, offers an internet account paying a competitive 6.41 per cent. There are no restrictions on withdrawals, a low minimum of £1 and a guarantee that it will pay 0.3 points above the Bank of England base rate until December 31, 2011.
Other good internet-only deals include First Save, which offers 6.5 per cent, and Alliance & Leicester, paying 6.5 per cent on its eSaver, open to existing current account customers.
Insurance
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Discounts of about 10 per cent on online car, travel and home insurance are now commonplace and the market for price comparison websites, such as moneysupermarket.com and gocompare.com, is booming. However, the British Insurance Brokers’ Association has criticised comparison sites for approximating the quotes returned to users and, therefore, potentially misleading them. And online premiums may not always be the cheapest.
Shares
Buying and selling shares online is well established. Brokers, such as TD Waterhouse and Halifax Share Dealing, offer lower charges for online services. For instance, Halifax’s online dealing charge is £11.95, against £15 for telephone dealing. Barclays Stockbrokers charges £6.95 per online trade if you make more than 11 trades a month, while Fidelity Share Network charges £9 a trade, with a £5 monthly fee. Interactive Investor, at www.iii.co.uk, offers free trading for six months and £1.50 thereafter.
Online fund supermarkets, such as FundsNetwork, offer discounts on the set-up costs of a fund, so you will pay no more than 1 per cent, against up to 5 per cent if you invest directly with the fund manager. Cofunds, the independent online investment platform for more than 1,000 funds, offers a free online portfolio access service for investments placed with Cofunds by advisers.
Tax
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Generally speaking, anything that involves paying money to the Government, either via Revenue & Customs or local councils (parking fines, for instance), can be done online.
CASE STUDY: Cheap remortgage so simple
Michael Dodd, 46, is one of the first borrowers to take out a paperless mortgage with Yorkshire Building Society. Mr Dodd, a police officer, found the deal while searching online for the best rates on remortgage deals. At 5.99 per cent, the Yorkshire’s five-year fixed-rate deal came out on top.
Mr Dodd, pictured with his wife, Kim, and daughters Isabel, 14, and Alice, 7 months, says: “We went for the Yorkshire because of the rate. That it was an online application was a bonus. The process was so smooth that I had to call to check that it was going through because it seemed too easy.”