Online banking is increasingly becoming the preferred method for managing finances. It offers convenience that traditional brick-and-mortar banking does not, such as the ability to check your balances, transfer funds, and pay bills from anywhere with an internet connection. But how safe is it?
Fortunately, online banks are generally very safe, though some may have more security features than others. Online banks are FDIC-insured just as traditional banks are, meaning each customer is protected by up to $250,000 per bank, per account ownership type. This protection guarantees that customers’ accounts will not be lost should the bank fail or become insolvent.
In addition to FDIC insurance, most online banks employ a variety of security measures such as data encryption and two-factor authentication to protect online banking accounts from fraud and theft. They also use sophisticated software systems to detect suspicious activity and alert customers immediately in the event of any potential theft or fraud.
Online Banks Use Encryption to Protect Your Data:
Online banks use encryption to protect your data, just like all other good websites. Encryption means that data is encoded and can only be unlocked by specific access codes. This means that if someone tries to break into your bank account, they won’t be able to do anything with the information they steal because it’s locked.
To put this into perspective, encryption is like a safe with a combination lock. If someone were able to get the money out of the safe, it would be extremely difficult for them to open the safe without knowing the combination. Encryption works similarly; without knowing the code, your data is not accessible or useful to anyone who might steal it.
Choose a Bank With Two-Factor Authentication:
The best way to ensure the security of your online banking is to pick a bank that offers two-factor authentication. This means that, in addition to providing your username and password, you will also need to provide an extra code or answer a security question before you can log into your bank account. Two-factor authentication helps protect your account from unauthorized access. It’s an extra layer of security, making it difficult for someone who knows your username and password but doesn’t have access to the second form of authentication.
The most common methods for two-factor authentication are using a code via text message or email, or through a special app such as Google Authenticator. Some banks offer both options so that you can pick whichever one is most convenient for you. Taking advantage of this feature is one of the most important steps you can take for secure online banking.
Check if Your Bank Is FDIC-Insured:
Online banks are usually FDIC-insured just as traditional banks are, meaning that the customer is protected by up to $250,000 per bank, per account type. This means that even if the bank ceases to exist or goes bankrupt, customers’ money is still safe and can be retrieved. To find out whether your online bank is insured or not, it’s important to do your due diligence.
Fortunately, you don’t have to look far – the Federal Deposit Insurance Corporation (FDIC) publishes a list of all of its member institutions on its website. The FDIC also has information available on its website about insurance claims, deposit insurance coverage, and other topics related to protecting customer funds in case of insolvency.
In addition to researching if your online bank is FDIC-insured, it’s wise to investigate what security measures it has in place for customers’ accounts and financial data. Reputable banks employ encryption technology on their websites and mobile apps to protect customers from cybercriminals attempting to access their data. Banks should also have two-factor authentication in place, which helps verify customers’ identities when they log in from an unfamiliar device.
It’s worth taking the time to research these safety measures as well as any special offers or services offered by an online bank before opening an account with them – no one ever wants their hard-earned savings put at risk.
Monitor Statements Regularly for Fraud:
Regularly checking your activity statements and account balance is a key security measure when banking guide online. Many banks offer notifications of large transactions that are sent to you via text or email in real time, allowing you to monitor your finances even more closely.
If there are any suspicious activities on your accounts, such as a large withdrawal you don’t recognize or an unfamiliar charge, report it to your bank immediately. Additionally, watch out for phishing emails and other scams designed to defraud customers by asking for sensitive information. Legitimate banks should never ask for personal or financial details in an email.
Finally, be sure to use strong passwords that are unique to each account and update them regularly. Look for two-factor authentication (2FA) options where possible, which adds extra layers of security by requiring you to enter additional codes sent via sms or email when logging in from a new device. Password managers are also recommended as they can generate and store secure passwords securely and quickly.
Take Normal Precautions: Use Strong Passwords and Update Software
Online banking is convenient and secure, but it’s important to still take extra precautions like creating a strong password and keeping your software up-to-date. A good practice is to use a combination of letters, numbers, and symbols for your passwords, and to make sure you’re regularly changing them. As passwords are often intercepted by hackers, using a strong password helps secure your banking information from being stolen.
When it comes to software updates, these are put in place by banks so that customers will have the latest security features available. New updates can include things like better server security or new encryption algorithms that could protect against new forms of hacking techniques. So make sure to consistently update both your device’s software as well as your online banking platform’s app when they become available.