How to Use Online Banking Safely

Online banking is a huge industry, and with very good reason. Handling one’s accounts and making transactions via the internet is convenient, efficient, and practical for all parties involved. Some people are quite weary, however, of doing their financial business online, and also with good reason. Keeping your finances safe and secure should be of the utmost importance – fortunately, this also is extremely important for banks.

Doing your banking online can be an excellent complement (or replacement) to in-person banking, so long as you have your bases covered to make sure that your accounts are protected just as well as they would in the “real” world. While there are many different aspects of online banking that one should consider before signing up with a particular bank, concerns generally fall into two categories: legitimacy and safety.

Legitimate Online Banking Systems

Many people who have been hesitant to take their banking online as of yet cite the fact that you do not always know what you are getting over the internet. While it is true that there sometimes are scams designed to trick people out of their money, there are very simple ways to be sure that an online banking company is legitimate.

Online banks may come in one of two different forms: either they are traditional banks (such as Chase, Bank of America, Citibank, etc.) that additionally offer services and products online, or they are more progressive banks that exist solely over the internet. No matter which type a company of interest may be, you will want to look for the same qualifications before deciding to do business with them.

When you find an online bank of interest, browse the site carefully to get a complete picture of the company. First and foremost, you should look for the words “Member FDIC” or “FDIC Insured”, or for the FDIC (Federal Deposit Insurance Corporation) symbol. When a bank is FDIC Insured, this means that consumers’ deposits up to $100,000 are protected.

As an extra precaution, especially if the company in question is one with which you are unfamiliar, check to make sure that the bank’s name is listed in the official FDIC database. Along with its listing, you also will find other helpful information such as the date from which the institution has been FDIC insured, the insurance number, location addresses, and government regulation information.

If you are not able to find what you are looking for, then contact FDIC. Some banks are chartered overseas, so they will not be insured by FDIC. Bank with such institutions at your own risk.

Once you have considered a bank’s status regarding FDIC, then find out all that you can about it. Read about the history of the company and familiarize yourself with its contact information.

Keep a careful watch out for companies known as “copycats”, or websites that purposefully present themselves as another, more well-known company. Such companies are named very similarly to other common companies so that potential customers will sign up. It should come as no surprise these businesses have but one purpose: to lure you in and sign you up. Look elsewhere!

Another note on names: Some common brick-and-mortar banks use a different name for their (quite legitimate) online branches. As far as FDIC is concerned, however, these banks are but one. If your deposits at both total more than $100,000 then, you should be aware than not all of it is insured by FDIC.

If you have any questions or complaints regarding the legitimacy of a bank, contact FDIC’s Division of Compliance and Consumer Affairs at 800-934-3342.

Safe Online Banking Systems

Once you have decided that an online bank is legitimate and worthy of your business, it is time to dig a bit deeper to confirm that your finances and personal information will be safe.

Read the privacy policy of a bank so that you understand exactly how your private information will be used. What information of yours will be stored? Will it be shared with other companies? If you are not comfortable with your information being given to other companies for marketing opportunities about which you might be interested, then ask the bank how you might avoid this. All reputable banks should have a clear method for you to protect your information in this way.

An online bank also might track your actions while you browse their website. If this makes you uncomfortable, then ask your bank if they engage in such action. If they do, you might be able to update your browser to disable this.

The most important safety measure about which you should be aware is whether or not an online banking system is secure. In order for your information to be secured away from unauthorized sources online, the website that you are on must encrypt your information. This means that the information you provide is scrambled and unintelligible to others.

If a website is secure, this will be indicated by a lock or a key icon somewhere on your browser. Make sure that you check for this icon when working with your bank accounts online. If the site is supposed to be secured but is not operating properly, then this is not good enough to protect your information.

Whatever you do, do NOT send personally identifying information or bank account information over email. Email is NOT secure.

Conclusion

Once you have confirmed the authenticity and integrity of an online bank, and feel confident with its safety, then you are ready to do your banking online. While there is some risk involved if you are not careful, online banking as a whole is very safe, very convenient, and will only become more widespread in the future.