Fewer fees and interest rates are available from online banks than from their brick-and-mortar rivals. But you also undoubtedly wonder if online banks are secure when you transmit money through cyberspace. You should conduct some research to confirm that the bank you are dealing with is reliable. Here’s a closer look at how online banks safeguard your funds as well as the steps you can take to make sure they do.
- 1 What is a bank online and Is Online Banks Safe?
- 2 How online banks protect your money
- 3 FDIC protection:
- 4 Two-factor authentication and encryption:
- 5 How to determine whether an internet bank is reliable:
- 6 1. View the company’s website and client testimonials:
- 7 2. Find out if it is FDIC insured: Are Online Banks Safe?
- 8 3. Research the safety precautions the online bank takes to keep your money safe:
- 9 How to keep your money safe when banking online:
What is a bank online and Is Online Banks Safe?
For those of you unaware, online banks are the ones who conduct all of their business online. You manage your finances using your phone or computer instead of their branch networks, occasionally stopping at an ATM when you need cash.
With the help of this strategy, online banks are able to cut down on the significant overhead expenses related to bank branch networks. These savings are then passed on to you in the form of greater annual percentage yields (APYs) and cheaper fees.
They are essentially the same as regular banks other than this. Along with the measures they take to safeguard your money.
How online banks protect your money
Can you trust internet banks? You’ll be pleased to learn that brick-and-mortar and online banks provide their customers with two major sorts of protection. Both safeguard against losses brought by bank failure and cyber attacks, respectively.
The Federal Deposit Insurance Corporation (FDIC) guards against bank collapse on behalf of customers. Like physical banks, most online bank accounts are FDIC insured. This indicates that the FDIC would compensate you up to $250,000 per account per bank in the improbable event that your bank went out of business. Up to $250,000 is insured for joint accounts per co-owner per bank. Consequently, a married couple’s joint checking account would be protected for up to $500,000 if they had one.
Your money may not be FDIC guaranteed if you choose an online credit union over an online bank, but that doesn’t mean it isn’t secure. The National Credit Union Association (NCUA), which protects credit unions, offers nearly identical guarantees to the Federal Deposit Insurance Corporation (FDIC).
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Two-factor authentication and encryption:
Your online banking information is more secure with encryption against hackers. The 256-bit advanced encryption standard (AES) is used by both physical and online banks. Due to the military’s usage of this encryption to safeguard some of their sensitive data, it is also referred to as “military-grade” encryption.
However, just because it’s difficult to get past the bank’s security measures doesn’t imply it’s impossible to access your online account. Hackers can potentially gain access by feigning to be a customer. They could be able to decipher a weak password or send out a phishing link in an effort to dupe users into disclosing their personal data.
Because of this, many online banks now permit or even demand two-factor authentication. This needs you to enter your login and password as well as finish an additional task to confirm your identity. Typically, you need to send a code to your phone and enter it. As a result, it is much less probable that an identity thief will gain access to your online bank account since they would also need to have access to your phone and know your username and password.
How to determine whether an internet bank is reliable:
If you’re considering opening a checking account online, or any other type of bank account for that matter, follow these steps to ensure you’re dealing with a reliable company.
1. View the company’s website and client testimonials:
To begin, look through the company’s website to see if anything seems wrong. Make sure there are no glaring mistakes on its “About Us” page, such as numerous misspellings that would indicate the website was put together in a hurry.
Additionally, Google the bank to seek client feedback. If you can’t locate any reviews or the ones you do discover say it’s a fraud, don’t go there Are Online Banks Safe?
2. Find out if it is FDIC insured: Are Online Banks Safe?
The majority of trustworthy banks have an “FDIC insured” notification in the website footer. However, it’s advisable not to take this as the only proof that the bank is legitimate.
To check whether the online bank you’re considering is FDIC insured, use the BankFind tool provided by the FDIC. You can conduct a search using the bank’s name, FDIC certificate number, or website. You should generally skip it if you can’t discover anything about your bank here.
One thing to keep in mind is that if you work with an online bank that is connected to a traditional bank, both organizations may use the same FDIC certificate number. If that’s the case, you might need to check up on the physical bank’s information.
3. Research the safety precautions the online bank takes to keep your money safe:
If you can’t find anything similar on a bank’s website, you can always contact the bank directly to inquire. Most banks include a page on their website explaining how they secure their clients’ money. Also, ask about two-factor authentication.
Additionally, make sure that the URL starts with “HTTPS” rather than “HTTP.” The extra “s” indicates that the website’s data is encrypted and therefore difficult for hackers to access.
How to keep your money safe when banking online:
Digital banking is becoming standard practice, whether you choose an online bank or a physical one. While banks do their best to safeguard customer data, you must also take security measures to protect your own personal information. Here are some pointers to assist you in doing that when using a mobile banking app or internet banking:
Always enter the website address for your bank into your browser. If you prefer not to do this, you can bookmark it. Don’t click any links that are given to you by email or text. This is most likely a con.
Never use a public wifi network for banking. This is how hackers can access your financial accounts. Use a private, password-protected network once you reach home.
Select a secure password, and change it sometimes. A mix of capital and lowercase characters, as well as certain numbers and symbols, should be included in your password. Do not record it. There is a possibility that it will be stolen or lost.
Put two-factor authentication to use. Even if your bank doesn’t demand it, set up two-factor authentication. You won’t spend much more time doing the extra step, but it can help protect your information. Are Online Banks Safe?
Create notifications for activity. You can create account alerts with many online banks for suspicious account behavior, such as significant withdrawals or transactions that take place in an odd location. By doing this, you can catch identity thieves before they really harm your finances.