Tech Talk: Personal finance tools now online, but are they safe?

Traditionally, personal finance and computing met at programs like Microsoft Money and Intuit Quicken. Both are desktop personal finance software programs that consolidate financial data from multiple institutions.

The user gives the software his or her online banking user names and passwords, then the software will download the data on loans, investments, credit cards, and bank accounts. The user can access his or her current net worth, set up budgeting, forecast, and view pie charts with spending habits based on auto-categorizing of credit card transactions.

The future of personal finance is Web-based. When an application is online, features and updates are simple to implement. The user can access information from any Internet connection, and no desktop software needs to be installed.

The innovator within free Web-based personal finance management is Mint.com. This Web application is in its public beta, which means that end-users can get a taste of the product and enjoy the new features as they come out (for example, budgeting analysis was just released).

Mint.com is in its infancy and currently only consolidates banks accounts and credit cards from U.S.-based institutions. It can analyze spending trends and present interactive Flash animations of pie charts and graphs.

To add to the "wow" factor and utilize the vast repository of financial data, there are benchmarks for bank account earnings, credit card interest rates, and spending at the pump. Users can see how they compare to the average and best figures. The service is free and supported by an unobtrusive "Ways To Save" tab where it will find credit cards with lower rates and better rewards.

Consider the controversy. Personal software users often have their usernames and passwords for various online banking services stored in a password-protected, encrypted file on their personal computer. With Web-based personal finance management, usernames, passwords, and security questions are stored on a Mint.com's server in Palo Alto.

What if that server was hacked? This possibility of identity theft has turned off many users. Mint.com responds to the concerns with certifications of privacy and network security from Verisign, TRUSTe, and Scanalert. A single break-in would ruin the entire business model for Mint.com.

Looking ahead, this service may be helpful to students. Assume that the typical Saint Joseph's student has a credit card and an ATM card. Many credit cards do not offer sophisticated reporting within online banking, so the spending trends month-to-month within Mint.com can be helpful. Students could also benefit from text message alerts for low checking account balances, bank fees, and unusual purchases.