Going paperless can stop fees from banks

Get ready for more incentives from bankers, lenders and others to get you to give up on paper and start using online accounts.

While it's obvious that the people who send you paper statements save money if you do your banking and bill paying online, it's possible for consumers to share in the wealth, too. All sorts of incentives or deals are out there.

If you're paying off student loans, for example, Sallie Mae offers a 0.25 percentage-point interest-rate reduction for customers who sign up for automated monthly deductions from a debit account. This could initially amount to a savings of about $3 a month for a student with $15,000 in loans at an interest rate of 6.8 percent.

The monthly payment of nearly $173 a month wouldn't change because the savings would be applied to the principal. In this example, the borrower would save more than $300 in 10 years.

Consumers who are pinching pennies should study their bills. MCI, for example, charges $1.99 each month for a paper billing fee.

As bankers talk more about banking online and via mobile phones, consumers need to know the rules and incentives, as well as how to avoid cyber-fraud. You don't have to look far to find some financial force or another trying to save paper and costs.

Bank of America recently rolled out its eBanking checking account, which drives customers to do most of their banking via mobile phone, ATM or the Internet. Customers who opt for this account can make deposits and withdrawals electronically without a monthly fee or minimum balance.

The kicker: Customers with this account who do not sign up to receive statements via e-mail and online will pay a fee of $8.95 a month.

The push to save green by going green, and dispensing with postage and paper, doesn't stop there.

Effective Sept. 30, the U.S. Department of Treasury is ending the sale of paper U.S. Savings Bonds for all federal employees who buy bonds through payroll deduction. For workers outside of the federal government, the paper savings bonds end Jan. 1, 2011. If you want to keep buying bonds through work, you'll need to set up an online account at www.treasury direct.gov.

Paper isn't going away altogether. You'll still be able to get a paper savings bond from a bank or other financial institution, said Joyce Harris, director of public and legislative affairs for the Bureau of the Public Debt in Washington.

And many places still will send out paper statements.

But bankers and lenders say the idea is to offer customers a choice, and possibly some savings.

"Many customers prefer to bank on their own schedule," said Don Vecchiarello, a spokesman for Bank of America in Charlotte.

Bank of America tested its eBanking checking plan in Georgia last November. About one-third of customers opening new checking accounts there have since opted for eBanking, Vecchiarello said.

He said the new product is a way for technically savvy customers to avoid a monthly maintenance fee. But some people, he acknowledged, still like to see a teller when they withdraw or deposit money.

That $8.95 fee, by the way, also would apply to an eBanking customer who uses a teller once or more during the month, instead of an ATM. No fee, however, is charged if the customer merely sees a teller for information, or for a transaction that cannot be completed at the ATM, such as depositing rolls of coins.

The banking industry also would like consumers to use online services to monitor their own accounts as a way to help prevent cyber-fraud.

"One of the big benefits to me from a convenience standpoint is that I can check my accounts frequently," said Michael Benardo, chief of the FDIC's cyber fraud and financial crimes section. "The more frequently you check your accounts, the better off you'll be at managing your money and protecting yourself against account fraud."

"The most effective way for banks and customers to protect the Internet environment is for us to work together," said Doug Johnson, the American Bankers Association's vice president of risk-management policy.

Increasingly, we're likely to see electronic banking options that go beyond just using a personal computer.

"You'll see more banks coming out with mobile banking," said Mark Schwanhausser, senior analyst, multichannel financial services for Javelin Strategy & Research in Pleasanton, Calif.

About half of households, or 43 million, now pay bills online through their banks and credit unions each month, according to Javelin.