by Joseph Kenny | 10/15/08

Many people are used to managing their bank accounts on the Internet. Some people have also signed up or thought about signing up for credit cards on the Internet. Yet, very few people realize that you can, in a sense, "combine" the two. There there are credit cards out there for which you not only can sign up for online, but can also manage, pay for, and maintain-all online.

The question is: are online credit cards necessarily a good idea?

There are some obvious advantages. You can browse your credit card statements, check your balance, and even pay the bills without digging through paperwork. Plus, all your credit card-related activity and information is easy to track and store-again, without the confusion of reams and reams of paper. You can even download tax numbers, which should make filing taxes much more convenient. Some online credit card companies will automatically warn you if you're about to go over your limit, as soon as you log into their site.

However, many online credit cards have disadvantages you might not initially be aware of. Often, you will be paying, via hidden costs, for the convenience of an online credit card. There are several factors to research before you sign up for an online credit card.

First, see how long it takes for the credit card company to process your payments. Just because it's faster to make payments online doesn't mean the payments will necessarily be processed faster. Furthermore, look for extra finance charges added to your bills. Your online credit card payments may be costlier because the credit card might be charging you for online service.

Next, verify how secure and protected the site is. Your credit card payments will include your most sensitive monetary information, not to mention personal information that you would never want to get into the wrong hands. Read about the site's security policy. If the site is vague or does not mention the subject, be leery of it. An online credit card site needs to list its security features in exacting detail.

Then, recall: all the paperwork that comes with taking care of your credit card business the old fashioned way may be an inconvenience, but it may also save you in troubled times. If the past is ever in dispute, it is always good to have a record-and this applies to your credit card payment history in a big way. If you pay all your credit card bills and do all your credit card paperwork online, you won't have that paper trail, unless you go out of your way to save information on your computer. So, before you sign up for an online credit card, ask yourself: are you willing to do without a paper record?

Finally, ask yourself again: does the online credit card I'm applying for have any hidden costs associated with it that an old-fashioned card wouldn't have? Applying for an online credit card is ultimately very similar to applying for a regular credit card: you should read the contract very carefully before you sign up.