The price of convenience may be higher than you think

The banks don't often drop their fees. But this week the big banks withdrew their "other bank" charge for ATM withdrawals.

It's a reflection of modern reality: we're not using cash as much as we once did. And with so much invested in their ATM networks, the banks want them to be used, so they've made it more affordable.

It's a win-win. But as we move away from payments in cash to technology-enabled transactions, other issues arise.

We have to remember there's a downside to convenience if we use it mindlessly.

  • Contactless payments: I don't know how many seconds you save by using the tap-and-go EFTPOS terminals, but it sure feels fast and super-convenient. The potential trap is that you spend without thinking because you're not asked for a PIN. So, stay in control by reviewing your transactions.
  • Apple Pay/Android Pay: If your bank supports it, you can make a payment by waving your phone at an EFTPOS terminal. But because you're using a phone - not a card - you can quickly lose track of your spending. So review your account daily.
  • Virtual loans: Once you're signed onto their systems, and they accept your business, the virtual lenders make personal and business loans available on your smartphone. The loans can be cheaper than credit cards, and very convenient. But remember: it's still a loan and you have to repay it.
  • Comparison websites: Comparison sites help consumers shop for products such as mobile phones, home loans, term deposits and car insurance. They make it easy to find a better deal and make savings. But be aware that not all products are offered on a site, some providers are paying for prominent positions, and if it's a complex transaction like a mortgage, you may not get the personal guidance you need.
  • Subscriptions: Online services will charge you small monthly payments for everything from online streaming of TV shows to wine deliveries. They're highly convenient but they also lock you into ongoing costs. Before signing up for the micropayments, calculate the annual cost, as well as reviewing them regularly.
  • Smartphone gambling: An entire generation thinks that gambling on horses and footy is something you do on your smartphone account. But punters should remember that the convenience they now enjoy doesn't remove the risk: it's still gambling and you can still lose your money.
  • Investing: Smart investing apps have brought unprecedented access to data, speed of trades and total view of investments. But when you're investing, think about this: Is speed and instant access what I really need with a medium- or long-term strategy? Use this technology to advance your strategy, not simply to switch investments because you can.

The more we move to the convenience of technology-enabled finances, the more we have to consider modern issues. Privacy and security are the crucial ones - who can see my personal details? How vulnerable am I to theft or fraud?

As financial technologies improve, the access and power of the technology gives us so many options. But the convenience is most useful when we also exercise caution.

The story The price of convenience may be higher than you think first appeared on The Sydney Morning Herald.

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