How to Keep Your Money Safe When Online Banking

How to Keep Your Money Safe When Online Banking

Ashley Kilroy  Wed, June 28, 2023  SmartAsset

Bank failures and economic turbulence have made bank depositors nervous – but what about banks where you can’t visit a branch or speak to a teller? Can you withdraw your money when needed and protect yourself from risks? While the rise of online banks has given customers increased savings and a higher APY, it also raises questions about accessibility and safety. However, online banks are safe as long as they are insured by the FDIC. Because online banks can get the same coverage as brick-and-mortar banks, their customers aren’t at risk of losing their deposits.

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What Are Online Banks?

Online banks are banks without physical locations. Instead, they run their financial services solely on the Internet. Therefore, they have fewer overhead costs and offer customers lower fees and better interest rates.

Because online banks don’t have branches, you can access your bank account through your mobile phone app or the bank’s website on a computer. In addition, most online banks offer free ATM usage at thousands of machines across the country.

How Online Banks Protect Your Money

Physical and online banks alike face the challenge of securing their customers’ deposits. Online banks have a unique situation because of their digital business model. Fortunately, they protect your money in multiple ways.

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Encryption and Two-Factor Login Authentication

You’ve probably heard about different companies being hacked for their data. Online banks have learned from data breaches in the last two decades and implemented the industry-standard 256-bit advanced encryption standard (AES) common to banks of all types. The U.S. military encrypts data similarly, meaning your banking information is well-secured.

Because encryption locks away data, hackers sometimes try to log directly into customers’ accounts by guessing passwords. As a result, online banks and many other companies have two-factor authentication. As the name implies, you need two login credentials to access your account.

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https://finance.yahoo.com/news/online-bank-now-keep-money-130020645.html