Typically, most online banks are safe if they are FDIC insured. Things like banking fees will support the FDIC, meaning your account will be insured for no more than $250k. Normally, banks will charge additional fees to cover the FDIC insurance cost. But the insurance is there for your protection. You’ll be able to go to their website and scroll to the bottom to see if it’s FDIC insured or not. It’s not uncommon for people to sign up with online banks. However, it’s always good to know what the online accounts will come with and how it will effect you.
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Online Bank Security Measures
What makes an online bank and a physical bank different from one another is mainly just the presence of the physical branches they have. In reality, online and physical traditional banks have the same risks. However, before you apply for an online account, look into the security measures they take for your protection.
Some questions to ask are: do they encrypt your data information? Are there any firewalls or anti-virus programs in place? Are there other security programs to protect my information? All these questions can be answered when you find their different options. Some banks will offer things such as: fraud activity notifications, two-factor authentication, account freeze for any suspicious activity, account monitoring, and automatic time out after being idle.
Keep in mind that not every bank will offer you any specific precautions. Knowing what the bank does to secure your account is what makes it so reassuring. If you don’t like the bank you’re currently signed up with, there are lots of different online banks to try out.
Online Banking Risk Factors
As good as an online bank sounds, they do carry some risks that you should be aware of. If they aren’t FDIC insured your money doesn’t have a guaranteed protection. Hacking attempts are very common to online banks, normally, they will increase their security system after an attempt. There are lots of different ways a hacker can get to your account. Phishing is when a hacker sends you emails that look legit but isn’t from your bank. This will enable the hacker to have access to your computer and your personal information. Once you’ve given your personal information, they will have access to all of your accounts.
Keylogging is another way they can get to you. If you’re in a public area putting your information in, a hacker can keep track of your typing. Then they will use that information to get to your account. Keep an eye out for any suspicious looking apps as well. They may seem harmless, but can have spyware encryptions that can get into your bank account. Check the reviews out before downloading an app and look through their sources.
If you find yourself being a victim to hacking, report the incident to your bank immediately. Normally, federal law will require that you report the incident in 60 days, but the faster you do it the better. If you wait for a long time, it will increase the liability of the transaction. In other words, it is always a good idea to report it as soon as you see your account has been hacked into.
Advantages of Online Banking
Once you’ve secured your account from potential threats, there are lots of advantages that comes with online banking. They will offer perks such as: lower fees, high interest rates, 24/7 options, advanced technology, different customer services.
Online banks will normally have a lower overhead which will enable them to either have a smaller or no charge. Just check out free online checking and savings accounts to enjoy this perk. Having a higher interest rate typically comes with a minimum balance requirement. In other words, the higher your balance, the higher your interest rate is. When you bank online, they don’t have a physical branch you can visit when you have questions. So, you’ll never have to wait until a branch opens when you can go to their website at any given time.
Since this bank is online, they are equipped with better technology services than your traditional bank has to offer. With cutting edge technology and security measures, it’s how online banks run. Normally, a traditional bank doesn’t offer the highest protection options for the online and mobile options. Plus, there is more to offer with customer services when you need them. Because you cannot visit them in person, their website will provide everything you need to contact them if you have any questions or problems. Services provided will be via: phone, email, online chat, etc.
Conclusion
Now, you know the general basics of an online bank. Opening an online bank account for the most part is very safe. Remember, you must know what kind of benefits they have to offer. Plus, there are lots of ways that you’re able to protect your own account once it’s opened. Keep in mind, there are risk factors you need to be aware of. Once you’ve learned what risks come with online banking, you’ll be able to protect yourself from different attacks. If you’re not satisfied with the bank you’re with, there are so many different banks you can try out.
