Is Online Banking Safe?

Online banking opportunities offer consumers constant access to critical financial information and provide easy, no postage required mechanisms for paying bills and dumping account information into financial management programs. That said, there are safety precautions that consumers should abide by to prevent fraud or other illegal activities. In short, when done properly, online banking can be incredibly safe, but if you don't follow instructions you open yourself up to potential problems.

Make sure that your online bank is insured by the Federal Deposit Insurance Corporation, otherwise known as the FDIC. If your bank is part of a large, established brick and mortar institution, you're almost guaranteed to have FDIC protection. If the bank somehow goes out of business or otherwise defaults on its obligations to consumers, the federal government will insure your account up to $100,000 (or more given certain circumstances).

Just because your online bank doesn't have FDIC protection, however, doesn't mean that you should take your banking business elsewhere. Some non FDIC online institutions are protected by other insurance mechanisms, read the fine print on the online banking website to find more details.

Hackers and other Internet criminals present hazards for online banking, as well. One of the most devious scams involves creating simulacra online banking websites and then using these sites to fool consumers into turning over passwords, social security information, account information, and other valuable personal data.

While online banking hackers may not directly rob your accounts, they can also sell off your social security number and other info to third parties. To prevent this kind of scam, always check that the URL of your bank appears on your browser. However, the hacker produced simulacra banking websites may be identical to the website you are used to seeing at your banks homepage.

Finally, to ensure a consistent and regulated online banking experience, check your reports regularly, once every few weeks or once a month at minimum. Print out statements and save them in your files so you always have redundant hard copies of your transactions. You might even spring for special alert systems that clue you in if tampering or unusual activity occurs in your online banking account.

With the appropriate safeguards in place, online banking can be not only very safe but also incredibly convenient. Moreover, when you pay via electronic transfer instead of via check by mail, you protect yourself against other security frauds, like mail fraud.