The material presented here is for educational purposes only, and is not intended to be used as financial, investment, or legal advice.
Is Online Banking Safe? It Can Be if You Follow These Tips!
You’re trying to make an online transaction at your favorite clothing store, but when you go to check out, your card is declined. Your first thought is that you had money in your account this morning. So, you decide to call your bank to see what the issue is. When you make the call, you’re shocked to learn that your card has been used for a bunch of online transactions that you don’t recognize — and your account has a negative balance.
At first you panic, but since you reported the loss immediately, your financial institution gives you options for how to resolve the situation. You may even receive a provisional credit for the funds stolen from your account while the investigation is underway. In the meantime, you must get a new debit card and file a written report with the three credit reporting bureaus: TransUnion, Equifax and Experian. All in all, the incident is aggravating and inconvenient, but not financially devastating. Nonetheless, you wonder how you can protect yourself from similar incidents in the future.
Banking in the Cloud
Online banking is available at most banks and credit unions nationwide. These days, banking is more likely to occur online via a computer or mobile device than at a brick-and-mortar financial institution. A whopping 80% of Americans prefer to do their banking online rather than in-person at a branch.1
With this type of online banking volume, financial breaches are a real risk. And if you’re the victim of unauthorized online access to your financial accounts, it can be a pain to clean up the mess. Fortunately, you don’t have to give up the convenience of online banking and shopping to protect your sensitive financial and personal data.
Enhanced Password Management
Experts advise creating strong passwords for online financial transactions — and using unique passwords for every site. You’ve also been warned against carrying your passwords with you. But if you’re like many people, you access several different sites for banking, shopping, travel or eating out. There is no way you can remember five, six or a dozen different passwords.
Fortunately, you don’t have to try to remember multiple passwords and you don’t have to resort to unsafe practices like using simple passwords or the same password for every site. The solution is a password manager — a repository for all your passwords. You only need to commit a single strong password to memory. Several free password managers are available if your budget is stretched. Paid password managers often include premium services such as syncing between your computer and mobile devices along with storing your passwords.
You should also set up two-factor authentication for extra protection. There are two types:
- One system requires entering a code from a text message or automated phone call on your mobile device (or a code from an email message to your mobile device or computer) after signing into your password manager.
- The other system generates a random code on your mobile device to enter after signing into your password manager.
Both types allow you to generate a list of backup codes that allow you to access your account if you are not able to obtain codes from your computer or mobile device.
Even with a password manager and two-factor authentication, creating strong passwords is a must.
- Opt for longer passwords with more characters.
- Passwords should include uppercase and lowercase letters, numbers and special characters.
The effort involved with creating strong passwords and using a password manager with two-factor authentication may seem like a hassle but protecting your sensitive personal and financial data is worth the effort. The good news is that once you’ve established a secure system with a password manager and two-factor authentication, it isn’t necessary to change passwords every month.
Protecting Your Devices and Your Personal Information
Commercial and financial institutions have incorporated a number of safeguards to protect customers, including requiring strong passwords and incorporating secure online banking portals. However, there are a number of strategies that you as a customer can employ to protect yourself when banking or shopping online.
- Keep computer and mobile operating systems updated.
- Set up alerts for unusual transactions or balances below a certain level.
- If you receive an email message from a bank or commercial institution that seems questionable, call to confirm whether the message is legitimate. Make sure to not call the number in the email as it may be fraudulent and visit the institution’s website directly where you can find their contact information.
Remember to protect your debit card like you would cash since it’s linked to the money in your deposit accounts. Here are a few tips to remember when using debit:
If you prefer to avoid carrying around your debit card, consider linking it to a digital wallet. This virtual version of your old leather billfold allows you to store debit and credit card information for easy use without needing your physical card. Just scan your smartphone for in-store purchases or make a standard card payment online using the information from your digital wallet.
Best Practices for Financial Safety While Traveling
The majority of credit cards and debit cards can be conveniently used across the country and around the world. But the difficulties of identity theft or unauthorized access of financial data are magnified when breaches occur away from home.
Consider employing one or more of the five strategies listed below to protect financial and personal data while traveling.
- Avoid Public Wi-Fi Networks: It’s OK to use public Wi-Fi networks or computers to catch up on news or check out info on tourist attractions. But accessing sensitive data on a public Wi-Fi network opens your computer or mobile device to unauthorized access.
- Update Computers and Mobile Devices before Your Trip: It’s a smart practice to keep the operating system on your computers and mobile devices updated. It’s even more important when you’re in unfamiliar surroundings.
- Ensure Sites Are Secure when Making Credit or Debit Card Transactions: When using your credit or debit card online to make restaurant reservations or secure travel or hotel accommodations, check for security measures. The site URL should have "https:" versus "http:" in the address field. A small padlock or similar icon should also be visible on the page. If the site doesn’t include security features, make the transaction in person.
- Access Sensitive Data Only through Secure Connections: If you must access personal or financial data online, do so only on your own computer, preferably through an Ethernet network versus Wi-Fi. You should also employ a virtual private network (VPN) that shields data transmission from outside access while accessing sensitive information.
- Invest in Inexpensive Devices for Travel: : Especially if your plans include overseas travel, consider purchasing an inexpensive laptop and mobile device with only minimal software and apps installed. Such devices allow you to access the web (through a VPN) and make calls but minimize the risk of unauthorized access to personal data by hacking or loss or theft of your primary computer or mobile device.
Maintaining Online Safety in the 21st Century
Most of these strategies are easy to use and become second nature after a while. We live in a connected world, but being exposed to all this technology doesn’t mean your financial information will be compromised. Taking precautionary measures to ensure the safety of your funds is a practice everyone should incorporate into their daily lives.