Is Online Banking Safe?

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Is online banking safe? It's not that safe, believe it or not. Have you heard of somebody's account being hacked recently? For these reasons, we've outlined some tips to make sure you're protected.

Is online banking safe and secure? A ton of people believe that it isn’t — you may have heard from a friend or family member that their card was skimmed or robbed at an ATM or you may have experienced it yourself.

Online bank account safety should naturally be a concern for most Americans.

So if you wanted to learn how to boost your banking safety. We’ll share ways to boost your banking security in this post.

Do Hackers Hack Banks?

Online banks are growing at a steady pace as 51% of U.S. adults bank online. This means a steady pace of hackers is flocking to find ways to penetrate the system. Large financial banks have to defend against thousands of cyberattacks every day.

A recent Capital One Breach this year shows a bank hacker needs just one gap to wreak havoc. They were the victim of a cyberattack where over 100 million people’s information was captured. A single weak spot was all the hacker needed to capture all this sensitive data. Just this year, there have been 3,494 successful cyberattacks against financial banks, according to reports filed with the Treasury Department’s Financial Crimes Enforcement Network.


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These figures would concern anyone that banks online — including you and I. But does that mean you should completely stop banking online?

Related: Best Checking Accounts of 2021

Are Online Banks Safe to Use?

The short answer is yes. Banks that are online-only are safe, given that they have FDIC insurance. The Federal Deposit Insurance Corporation is an independent federal agency insuring deposits in U.S. banks and thrifts in the event of bank failures. So if you are a member of an online bank that has FDIC insurance, your money is insured up to $250,000.

So even in the event that a hacker steals your money, you will be safeguarded. Your online bank has to reimburse you for your losses if reported within 60 days. This is a reason why many people track their finances on a weekly basis by using free money management tools like Mint and Personal Capital.

However, this doesn’t mean that you shouldn’t be aware of the risks associated with online banking.

Related: Understanding Infinite Banking: Does It Make Sense For You?

Online Banking Risks

Anyone who banks online faces these common risks. Learn more about them so you can protect your information — and money.

Phishing

Phishing is a fraudulent attempt to steal your personal email and is usually done through emails. People who phish create fake websites that look real but are designed to steal your information. The goal of the phisher is to have you click the link in the email and get sent to the fraudulent website, and once you enter your credit card, password, or other account data, the phisher then has it.

Odds are that if you check your spam folder you’ll see tons of phishing emails. See if you can identify why the phishing email below is malicious:

is online banking safe

You might have spotted a few mistakes — it is from a Comcast email (not Bank of America), it not sent directly to the recipient, grammatical errors, the text does not match, and the hyperlink is to a different site. How alarming is that?

Related: 11 Best International Money Transfer Apps to Use

Identity Theft

According to Experian, Identity theft is when someone steals your personal information and uses it without your permission. There are several forms of identity theft, and each one can affect you in a different way. The most common forms of identity theft are:

  • Driver’s license ID Theft
  • Social Security ID Theft
  • Medical ID Theft
  • Character/Criminal ID Theft
  • Financial ID Theft

The goal of the criminal is to get as much information from you as possible. According to CreditKarma, identity theft is hard to protect against because hackers can obtain your information in a data breach. So it can happen to anyone and the effects can be damaging.

Related: What are Overdraft Fees and How Can You Avoid Them?

Keylogging

A keylogger (short for keystroke logger) is software that tracks or logs the keys struck on your keyboard, typically in a covert manner so that you don’t know that your actions are being monitored. So if you click a suspicious link or visit a shady website you can have a keylogger installed on your device — which will record your keystrokes to steal passwords and other sensitive information.

How to Protect Yourself

As you can see online banking has some risks so we’ve outlined some tips to make sure you’re protected.

Choose an Account with Two-Factor Verification

Try to use an online bank account that offers two-factor authentication (2FA) for added security. In 2021 a lot of, but not all, online banks offer this service which is an extra layer of protection used to ensure the security of online accounts beyond just a username and password.

More websites and online banks are using this to provide additional layers of security. If you’re not using it, you should check to see if your online bank offers it and turn it on.

Related: Never Pay a Bank Fee Again: How to Avoid Extra Charges and Keep More of Your Money

Create a Strong Password

Make sure that you create a secure password and that your password is strong. Using a password manager helps here since it can create strong passwords but also remember them for you. If you don’t have a password manager, making sure you use a mix of upper and lower case letters, numbers, and special characters are key.

Always keep away from using any ordinary words or phrases and on no account create a password that holds your name, initials, or your date of birth. If your online bank permits it, then be sure to change your passwords every few months.

Use Security Software

Security software is necessary these days, no matter what you are using your computer for. At the very least, make sure you are running antivirus software that scans your device weekly.

This will make sure you are protected from trojans, keyloggers and other types of malware that could be used to gain entrance to your financial data. In addition, make sure that you are updating the antivirus software so there aren’t any security holes that you are missing.

Avoid Clicking Phishing Emails

Pay attention to your emails before clicking on anything. Phishing emails can look very real if done correctly. As discussed earlier, this is a common practice by hackers who want to get your password credentials and information from you for malicious reasons.

When you log in to ‘your account’ they will take your username and password and, ultimately, your cash. So it is always safer to enter your online bank account by typing the address into your browser instead of visiting the site through a link.

Also, be attentive to unwanted phone calls that claim to be from your bank. Your bank generally will want you to answer a safety question and they never ask for passwords or PINs (they may ask about for some letters or numbers from them but in no way the entire thing).

Monitor Your Banking Accounts Regularly

It should go without saying that checking your bank report every month is a good routine to get into as any unauthorized transactions will be there to monitor. Also, make sure you are up to date on the best credit card safety tips

You have the due diligence to monitor your online banking accounts and take advantage of the fact that you can check from your phone or laptop in seconds to see if your accounts remain safe.

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About the author

Brian Meiggs
Brian Meiggs
Brian Meiggs is a personal finance expert, and the founder of My Millennial Guide, a personal finance site helping you put more money in your pocket. He helps millennials follow the smart money in order to increase their earning potential and start building wealth for the the future. He regularly writes about side hustles, investing, and general personal finance topics aimed to help anyone earn more, pay off debt, and reach financial freedom. He has been quoted as a top personal finance blogger in major publications including Yahoo! Finance, NASDAQ, Discover, MSN Money and more.

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