Intuit releases a new product today: Quicken Online, a web-based version of its popular personal finance software. I’m a long-time Quicken user, so when Jodi and Jim from Intuit offered to give me a preview of this product’s features, I jumped at the chance. Please note: I haven’t actually used Quicken Online myself yet, and I am not being compensated for this preview. (15 Feb 2008: I have joined a Quicken Online affiliate program — if you sign up by following one of my links, I earn a small commission.)

Geared toward new users
Jim began our interview by emphasizing that Quicken Online is different from the desktop version. “Quicken Online is targeted toward non-consumers of personal finance products,” he said. “There’s a large segment of people who do nothing around personal finance. About 41% of Americans live paycheck-to-paycheck. Quicken desktop products are for people who know they want to be better, and are willing to seek out help. Young consumers aren’t willing to do that, but they still have personal finance needs.”

Quicken Online’s basic philosophy is to take as much work as possible out of tracking your money. The software “learns on the fly” — when you categorize or rename a transaction, it remembers this for the future. It also learns from other Quicken Online users.

Like other online personal finance software, to use Quicken Online you must supply the username and password for each financial institution you want to track. Quicken Online connects to the accounts, and then aggregates all your financial information into one place. (Intuit does this all “in-house” — it doesn’t sub-contract aggregation to Yodlee or CashEdge.)

Quicken Online in action
Once Quicken Online is set up, it auto-updates with information from your savings accounts and banks every day. The software will assign categories based on past experience, though you’re free to change these at any time. As you’d expect, Quicken Online lets you run a number of reports. For example, you can get a quick snapshot of how you’re spending your money:

The program tries to encourage good personal finance by showing whether you’re living within your means:

Quicken Online offers a sort of social network for support. “From within any screen in the product, you can bring up Live Community,” Jim told me. “You can see questions and answers from other users and from support staff.”

The software automatically maintains two account balances for the user: the balance according to the bank, and the “real balance”. Most of us have learned that there are inevitable lags between when we write checks or submit electronic transactions, and when these events are reflected at the bank. The bank doesn’t always really know how much money we have. Quicken Online displays the bank balance, but it also tracks the “real balance”, the actual amount of money you have available. This is a Good Thing — I’ve heard too many horror stories from people who use their bank balance to plan their spending and end up overdrawn because of it.

Possible drawbacks
Quicken Online is not a complete personal finance solution. Not yet. It doesn’t offer any sort of investment tracking, and its reporting functions are more limited than what existing Quicken users may be accustomed to. Also, certain features we know and love (such as the ability to split transactions) have not yet been implemented. Some of these features are coming in future upgrades, but right now the goal of Quicken Online is to introduce new users to the concept of tracking their money.

Security concerns prevent many people from trying online personal finance software. I asked Jim how Intuit plans to deal with privacy matters. He assured me that user information is safe. Your account information is not retained once you’ve set up Quicken Online. “If somebody were to break in to the servers, they couldn’t get account numbers,” Jim said. “They’d just be able to see how you spent your money.”

Quicken Online is currently offering a 30-day free trial, after which there is a $2.99/month subscription fee.

Assessing the competition
“How is this different than Mint or Wesabe?” I asked. “Why would anyone pay for this when there are free solutions?”

“Good question,” Jim said. “For one, we’re advertising-free. We make money off the monthly fee. Mint makes money by selling you things.” Jim also stressed that Quicken Online has better connectivity. “And it has the best user interface over Mint and Wesabe,” he told me. “There’s better categorization. Once Quicken learns, it’s pretty easy. It’s just a better experience.”

You can use Quicken Online with your iPhone (or other PDA). Intuit also hopes to integrate Quicken Online with TurboTax Online for tax year 2008.

The bottom line
With so many web-based personal finance tools out there, which should you use? Nobody can answer that but yourself. Quicken Online looks like a fine choice, but if you already use Wesabe or Mint (or another program), there’s no need to change. If you don’t yet track your finances on a regular basis, give each of these a try to see which best fits your style.

As for myself, I’m perfectly happy with the desktop version of Quicken.

This article is about Budgeting, Money Hacks, Tools