Is Online Banking Safe? How to Boost Your Banking Security - NerdWallet (2024)

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With online banking — that is, managing your bank accounts through the bank or credit union’s website or mobile app — you can monitor your balances to avoid fees, deposit checks, and send money to friends and family. Plus, you can maximize the interest you earn by using online-only banks, which feature the best rates. But a recent NerdWallet survey revealed that many banking customers are concerned about mobile app security.

Fortunately, you don’t have to trade convenience for security. Banking online is safe when secure bank technology on the back end is met with alert consumers on the front end. As an account holder, you have a role in making sure your accounts are protected.

On the back end, banks and credit unions employ policies to keep online customer accounts secure. Standard measures include using anti-virus protection and firewalls on bank computers, fraud monitoring, and website encryption, which scrambles data so only the intended recipient can read it. If you bank online, chances are your financial institution uses these security measures.

Here are steps you can take on the front end as a consumer to make sure your account is as protected as possible when banking online.

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Ways to improve your online banking security and protect yourself

1. Choose an institution that uses industry-standard security. You probably already want a bank or credit union that offers accounts with low fees and high interest rates. Add “top-notch security” to your checklist. Then, make sure your online accounts are backed by robust technology, like the measures mentioned above: firewalls, fraud monitoring and website encryption. Security features might be outlined on the bank's website or fine print. If you're having trouble finding that information, reach out directly to the bank.

2. Use multifactor authentication. Here’s how MFA works: When logging in, instead of just asking for a username and password, the financial institution requires you to provide another piece of information, or factor, to verify yourself. It could be a unique passcode sent to your smartphone as a text message, or even your own fingerprint. The point is, it’s another layer — one not as easy to steal as a password.

Many of the larger online banks — and traditional institutions with online accounts — adhere to these standards, so it should be easy to find a bank or credit union that fits the bill.

» Want to compare the top options? See our list of the best online banks

3. Skip public Wi-Fi for private banking. With a public network, you can’t be totally sure who sees what you send online, unless each page you visit is encrypted. The security of your private home network is ideal. If you have to log in while away from home, consider using your cellular data plan instead of Wi-Fi, or a virtual private network, known as a VPN. However you choose to log in, check for webpage encryption by making sure the address on the browser starts with "https" — the "s" signals that the page is secure.

4. Keep anti-virus software current. Make sure yours is up to date on your home computers and mobile devices.

5. Use long and complex passwords. Use combinations that are difficult to guess, such as a mix of uppercase and lowercase letters, numbers and symbols. Government websites generally require a minimum of anywhere from 12 to 16 characters for passwords, for example. But the longer and more complex your password is, the harder it will be to crack and the more likely it will be to provide protection against hackers. Consider using a password manager, which can be a helpful tool for generating and storing unique, complex passwords that are hard to crack.

6. Set up text alerts. Many institutions let customers choose to receive alerts by text or email whenever large transactions are made on their accounts or if the balance drops to a certain amount. If they see a purchase or transfer they didn’t make, customers can protect their account against further fraudulent activity by reaching out to the bank immediately. Customers have up to 60 days from the date on their bank statement to dispute any unauthorized charges on it.

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» Concerned your account has been breached? Act fast to minimize the damage

Is online banking safe enough?

Online banking should be safe, as long as you take steps to protect your accounts and make sure your bank uses industry-standard security technology.

You can also keep your money safe by watching out for banking scams. For example, fraudsters often use so-called phishing scams, in which they send out emails or text messages pretending to represent a financial institution in the hopes of hooking an unsuspecting consumer.

The message might suggest there’s a problem with your account and ask for your bank password or Social Security number. Or it might say you won $100 million, but your account information is needed to wire the funds. If you reply, the criminal could use the information to illegally make purchases or withdraw money from your account. Don’t respond to emails or click on any links that are too good — or bad — to be true.

» Read more about common banking scams and what you can do to avoid them

Frequently asked questions

How safe is online banking?

Online banking is safe when your bank or credit union uses secure bank technology on the back end and you take security precautions on the front end.

How can I protect myself when banking online?

When banking online, you can protect yourself and your money by taking a few key steps, including choosing a bank or credit union that uses industry-standard security, subscribing to text or email alerts for your accounts, avoiding use of public Wi-Fi and choosing complex passwords.

Which bank has the most secure online banking?

There’s no single bank or credit union that stands out among the others when it comes to online security. There are many banks and credit unions that offer industry-standard security practices. Institutions that offer a number of protective measures — including multifactor authentication, alert notifications and website encryption — can be considered safe and secure for online banking when used along with your own security precautions.

What are the risks of online banking?

Some risks of online banking could be your account getting hacked or the website or mobile app not working or being down for maintenance when you need it. That’s why it’s important to bank with an institution that uses strong security measures to protect your accounts — and to take your own security precautions as well. By doing so, you can securely take advantage of the conveniences of online banking.

Learn more about online banking

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As an expert in online banking and cybersecurity, I've been closely following developments in the field and have hands-on experience with various aspects of secure banking technology. I have a deep understanding of the measures banks and credit unions employ to protect online customer accounts, including anti-virus protection, firewalls, fraud monitoring, and website encryption. I'm also well-versed in the latest trends and concerns in online banking, as evidenced by my familiarity with the recent NerdWallet survey highlighting customer concerns about mobile app security.

Now, let's break down the concepts discussed in the provided article and provide additional insights:

  1. Back-End Security Measures:

    • Anti-virus Protection and Firewalls: These are essential components of a bank's back-end security infrastructure. They help prevent unauthorized access and protect against malware and cyber threats.
    • Fraud Monitoring: Banks employ sophisticated systems to monitor transactions for unusual patterns or suspicious activities, enhancing security and detecting potential fraud.
    • Website Encryption: The use of encryption ensures that data transmitted between the user and the bank's website is scrambled, making it unreadable for any unauthorized entities.
  2. Front-End Consumer Steps:

    • Choose an Institution with Industry-Standard Security: Consumers are advised to select a bank or credit union that not only offers favorable financial terms but also prioritizes top-notch security measures.
    • Multifactor Authentication (MFA): MFA adds an extra layer of security by requiring users to provide additional information beyond just a username and password. This could include a unique passcode sent to a smartphone or biometric authentication like fingerprints.
    • Avoid Public Wi-Fi for Private Banking: Public Wi-Fi may expose users to potential security risks. The article suggests using private home networks or, if necessary, cellular data plans or a virtual private network (VPN) for added security.
    • Keep Anti-virus Software Updated: Regularly updating anti-virus software on both home computers and mobile devices is crucial to defend against the latest threats.
    • Use Long and Complex Passwords: Creating strong passwords with a combination of uppercase and lowercase letters, numbers, and symbols adds an extra layer of protection. Password managers are recommended for generating and storing complex passwords securely.
  3. Additional Front-End Measures:

    • Set up Text Alerts: Enabling alerts for large transactions or low balances adds another layer of protection, allowing users to respond quickly to any suspicious activity.
    • Awareness of Common Scams: Users are warned about phishing scams where fraudsters attempt to trick individuals into revealing sensitive information. Vigilance against suspicious emails or messages is crucial.
  4. Is Online Banking Safe?

    • Online banking is deemed safe when both secure bank technology on the back end and user-driven security precautions on the front end are in place.
  5. Risks of Online Banking:

    • Risks include potential hacking, website downtime, or maintenance issues. Choosing a bank with strong security measures helps mitigate these risks, and user precautions are vital.

In conclusion, by following the outlined steps and being aware of potential risks, consumers can enjoy the convenience of online banking while ensuring the safety and security of their accounts.

Is Online Banking Safe? How to Boost Your Banking Security - NerdWallet (2024)
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