Is Online Banking Safe? The FDIC Weighs In

by Jason Unger

If there’s one question that seems to never die, it’s about the security of banking online.

Doing a quick Google search for “Is online banking safe?” generates more than 7 million results, with some headlines saying it’s still safe while others screaming dangerous and scam alert.

But when it comes to your money, who can you really trust to tell you how to bank safely online?

For that, we head to the FDIC’s Safe Internet Banking page, which provides the following how-to tips for banking online:

  • Confirm that an online bank is legitimate and that your deposits are insured
  • Keep your personal information private and secure
  • Understand your rights as a consumer
  • Learn where to go for more assistance from banking regulators

How to Determine if the Bank is Legitimate

The FDIC offers these tips for ensuring your online bank is legitimate and insured:

  • Read key information about the bank posted on its Web site.
  • Protect yourself from fraudulent Web sites. (make sure you’re at the right site)
  • Verify the bank’s insurance status. (look for FDIC logo or text)
  • For insurance purposes, be aware that a bank may use different names for its online and traditional services; this does not mean you are dealing with separate banks.
  • Know where to get more information about FDIC insurance.

Protecting Your Privacy Online

Here’s what the FDIC says about your privacy rights:

Starting July 2001, banks are required to give you a copy of their privacy policy once you become their customer, regardless of whether you are conducting business online or offline. You may also see a copy of it posted at the bank’s Web site. By reviewing this policy you can learn what information the bank keeps about you, and what information, if any, it shares with other companies.

I can’t say that I’ve ever worried about my bank invading my privacy, considering they already have most of my crucial information (account numbers, social security number, etc.). But if a bank ever did release this type of information, they’d lose customers left and right. So I’m not too worried about it happening.

Are Your Online Transactions Secure?

Keeping your online banking secure requires you to understand:

  • Encryption is the process of scrambling private information to prevent unauthorized access. To show that your transmission is encrypted, some browsers display a small icon on your screen that looks like a “lock” or a “key” whenever you conduct secure transactions online.
  • Passwords or personal identification numbers (PINs) should be used when accessing an account online. Your password should be unique to you and you should change it regularly. Do not use birthdates or other numbers or words that may be easy for others to guess.
  • General security over your personal computer such as virus protection and physical access controls should be used and updated regularly.

Online banking is the crutch of automating your finances, and to keep you safe, you need to use common sense.

As the FDIC says:

As in everyday business, before you order a product or service online, make sure you are comfortable with the reputation of the company making the offer. Only then should you give out your credit card or debit card number. And never give the number unless you initiated the transaction.

FDIC Safe Internet Banking

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