Have you considered opening an online banking account, but have concerns regarding identity theft, security, or other potential safety risks?
For the most part, online banks are just like regular banks — the only difference is that they conduct all of their business online and have no brick-and-mortar locations. If you’re not sure which route to go, most traditional banking institutions also offer online banking services so you might not have to choose between the two types.
Yes, Online Banking is Safe
Legitimate online banking institutions offer the same features, rewards and risks as regular banks. As with any type of financial institution, you need to make sure you’re choosing the right one through online research and reading customer reviews.
If you’re in the market for an online bank account, we’ve compiled a list of security features you can be on the lookout for to help ensure the safety of your money.
Security Features to Look for in an Online Bank
What kind of security features should you look for in an online bank? Consider a security guarantee, two-factor authentication, text and email security alerts, microchips, photo enhancement and fraud monitoring.
A security guarantee is a policy or pledge made by a bank regarding the level of security your account holds when it comes to fraudulent activity and other potential security breaches.
For example, Bank of America offers an online and mobile banking security guarantee. As you research online banks, look into their security guarantee and what measures are in place if your account is compromised.
Two-factor Authentication (2FA)
Two-factor authentication (2FA) adds a second level of authentication to an account login. When you have to enter only your username and one password, that's considered a single-factor authentication. Two-factor authentication requires you to have 2 out of 3 types of credentials before you can access an account:
- Something you know, such as a personal identification number (PIN), password or pattern.
- Something you have, such as an ATM card or phone.
- Something you are, such as a biometric like a fingerprint or voice print.
If you come across an online bank that does not offer 2FA, you might want to steer clear. Most credible banking institutions provide 2FA along with traditional checking and savings accounts.
Text and Email Security Alerts
When your bank detects suspicious activity on your account, it should generate text and email security alerts. That way, you’ll be immediately notified when something is amiss so you can address it quickly.
For example, if you live in New York and your debit card suddenly begins ringing up purchases in Hong Kong, your bank may generate an alert for your protection.
Some banks allow you to contact them when you travel so they’re aware you’ll be out of town. U.S. Bank allows you to customize your security alerts according to what’s important to you. For example, you can set up alerts when the following situations occur:
- Account balance falls below an amount you specify
- Negative balance
- Withdrawals or deposits that exceed a specified dollar amount
- Changes are made to any of your personal or account information
Microchip-Enabled Debit and Credit Cards
A few years ago, most debit and credit cards only featured metallic security strips, which allowed you to make purchases and payments. Now, security features involve embedded microchips because it’s much more difficult for criminals to create fraudulent cards that contain these chips.
Microchips change the encrypted numbers for every transaction to ensure the authenticity of the card each time it’s used.Be sure you get a microchip-enabled debit card from any online banking institution to better protect your personal information and finances.
Photo-Enhanced Debit or Credit Cards
Some banks offer debit or credit cards that feature your photo on the front so it’s much harder for a thief to use your cards. Wells Fargo, Citibank and Bank of America all offer this feature.
Free Identity Theft, Fraud and Credit Score Monitoring
Some banks offer identity theft, fraud and credit score monitoring as part of their banking services. If your bank offers this service, consider taking advantage of it.
Look for banks that use the latest technology and strategies to monitor your account and if it detects fraud, the bank should call you as soon as possible. Banks that monitor your credit score will alert you if someone applies for a credit card using your name.
Online Banking Security Tips
There are many things you can do to ensure your online banking information stays safe and secure.
Create a strong password. Don’t include your real name, birthdate, Social Security number or other easy-to-guess information in your online banking password.
Establish security alerts. As mentioned above, your bank should allow you to set up parameters for security alerts so you can be notified if suspicious activity occurs.
Check your online account often. If you log into your account at least once a day, you’ll be able to keep on top of all your activity and spot anything out of the ordinary.
Log in to trusted provider networks. Don’t conduct online banking activities unless you are familiar with the network provider and you know it’s secure.
Search for high overall ratings. Banks that receive high customer satisfaction ratings will likely have good security policies in place. Look for accolades such as this one from Bank of America: Bank of America received the highest recognition in customer satisfaction for retail banking advice in the J.D. Power 2019 U.S. Retail Banking Advice Study.
Keep Your Money Safe
In addition to online banking security options, try downloading a few apps that can make financial planning easier, too, such as a budgeting app, which can help you track your spending with just a few clicks.
One of the best ways to save money is to make sure your money is safe. Follow the tips we’ve shared here and use a bank that offers high-security protection. That way, you’ll be able to focus on saving money rather than worrying about losing to hackers. Ultimately, just be sure to take advantage of all your bank’s security measures.
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About Laura Hipshire
Expert-level knowledge of Medicare Advantage plans and regulatory guidelines