How Safe Is Online Banking?

I have been banking online for over 10 years now (at ING Direct and Perkstreet Financial) and have never had a single incident. But after Citibank got hacked last week a lot of people are wondering how safe online banking really is.

The truth is there is risk, but there is just as much (if not more) risk using a traditional bank. The key is to be vigilant to protect your data and information as best as you can.

According to an article from Yahoo Finance:

“Using the Internet to bank, buy music, or shop is still as safe or safer than visiting brick-and-mortar locations, as long as consumers take precautions and know what to do if they notice any suspicious activity. In fact, the overall trend is a reassuring one: 2010 actually saw fewer records breached than the previous year due to new infrastructure in place, says Julie Conroy McNelley, senior fraud and risk analyst at research firm Aite Group. Today, she adds, ‘banks have some of the most sophisticated mechanisms in place.'”

How to keep your bank account safe

The article gives a few tips on protecting your information and doing your part to ensure the safety of your bank account. Here are a few of the noteworthy ones…

  • Don’t click on hyperlinks within emails from strangers and be cautious of those from friends.
  • Treat your smartphone like the computer it is. It should should be guarded just like your laptop or desktop computer.
  • Don’t pick easy passwords – invent a new word or acronym to make it more difficult to guess.
  • Buy a shredder and use it (or store) your financial mail.
  • Respond quickly. If you have been hacked call your bank immediately!

Use a service to help

A couple weeks ago I wrote about a free service called Bill Guard which helps consumers fight back against erroneous charges and fraudulent activity.

Do you bank online? What precautions do you take to keep your info safe?

Photo by Tristan

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  1. NIndo Mom

    Two more important things to remember:

    1. If you use wireless networking to access the Internet at home, make sure it’s SECURED to avoid having your private financial info stolen, and

    2. Be sure to keep your security software UP-TO-DATE.

  2. Mortgage Nerd

    I’ve been nervous about online banking in the past. These are some good tips to calm the nerves. Thanks!

  3. Sandyba

    I work at a large national bank, and I have not heard of our online banking site being hacked. I am assured it has the same protections as the government websites. I figure all of that information is on the internet anyway, it is just a matter of using a username and password to see it yourself. Otherwise, how else could a physical bank access all customer accounts?

    There are two things we recommend. One, don’t keep a high balance in your checking, so put the “extra” funds in a savings account, preferably one not connected as overdraft protection. Two, have a separate checking account for a variety of uses, such as online shopping, traveling (home or abroad), paying bills in the mail (account number on the bottom of the check), etc. Have the direct deposits go into one account, then move money around as necessary. It certainly saves a lot of hassle if an account is compromised to not have to change every direct deposit or automatic payment.

  4. I also bank online with my Visa Debit Card, and at some times for emergency reasons I need to log in to my account in computer shops and the best thing that I do is removing the history of the search engine so that those hackers will not access my account. But It is really risky because there are key loggers in some computers that can be the reason why there are people who knows your password or pin.

  5. Mike Angelinovich

    If online banking was secure, the FFIEC would not have had to step in and raise the security bar. You are right that the number of hacks last year was slightly down from the previous year because Hackers can now do a better job at targeting larger bank accounts, such as commercial accounts. If you look at the total dollars stolen last year it was another all time record breaking amount. We are now offering our FI clients software designed from our legacy smart chip product to provide them with accessing authentication that is as strong or stronger than a smart-card and invisible for their online banking member’s convenience. The FFIEC has already started auditing FI’s to insure they are offering strong multi-layers of security, which most online bank accounts have not had such security protection.