In today's hectic world, online banking can offer a convenient and easy alternative to traditional banking. No longer is it necessary to wait in long lines while on your lunch hour or worry about getting checks in the mail in time to make your car or mortgage payment. Nearly every bank offers online banking, and almost every company allows customers to pay their bills online.
Although online banking offers numerous benefits in addition to convenience, such as detailed transaction records and automatic payments, banking online can potentially pose a number of risks to your security. Protecting yourself, your identity, and your money should be a priority for every banker, whether transacting business online or not.
Using a reputable bank that is insured by the FDIC and taking steps to ensure that your information remains secure and private will enable you to bank online with no worries.
Use only reputable institutions for your online banking
It is almost always a wise choice to place your money with a trusted financial institution. But how do you define "trusted financial institution?" While some smaller banks, especially those located overseas, may offer better interest rates or additional free services, reputable banks with a long history are generally the better choice.
If you decide to go with a lesser-known online bank, make certain to research the institution thoroughly and speak with a customer representative to verify the bank's location and status before handing over your money.
Make certain your money is insured against loss
Unfortunately, not all institutions offering online banking are insured, and using an uninsured banks immediately puts your money at risk. Should an uninsured bank become bankrupt, you could potentially lose every penny stored in that bank.
The Federal Deposit Insurance Corporation, or FDIC, cautions all online bankers to verify their bank's insurance status by locating the FDIC logo on the bank's website or by searching the FDIC database for the institution's certificate of insurance.
See also: Recent FDIC changes and how they affect you
Protect yourself from phishers and identity thieves
Cybercriminals and phishers are using increasingly sophisticated techniques to obtain account information and passwords by luring web users to copycat banking websites and through other methods.
Typically, an email is sent requesting that the user "update" his or her account details by following a link contained in the email. The link then takes the recipient to a fraudulent site that often appears identical to a website belonging to a legitimate banking institution. If any information is entered into the fraudulent website, the data is collected, stored, and could be used for criminal purposes.
Never click on a link contained in an email, even if it appears to originate from a legitimate source. Either type the true web address directly into your browser, or call your bank for instructions.
Choose only banks with updated security features
Online banks are a primary target for hackers and other criminals, and it is essential that your bank use up-to-date encryption technology and SSL to protect your money. SSL, or secure socket layer, technology scrambles your personal and private information to make it less accessible to identity thieves.
Reputable banks nearly always list their security and encryption information directly on their website. If you have any questions or concerns about the security of your identity or money, do not hesitate to call the bank directly for reassurance.
Minimize your risk
Concerns over security should not prevent you from online banking. However, banking online does pose additional risks that traditional banking does not. Knowing your rights and responsibilities as an online banker, taking the time to carefully research any institution you are considering, and demanding verification of security features will go a long way toward minimizing any risks associated with banking online.
