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Updated: August 16, 2011
Your Digital Dollars - Banking Online Safely
Protect your identity and accounts while banking by computer
Paying a bill, depositing a check or conducting any other financial transaction used to require a trip to the bank or post office. Now technology makes it possible to bank and pay bills without leaving your home or office.
- This publication is part of the Digital Dollars training module.
Table of Contents
Online banking is safe and offers many advantages over branch banking. But that doesn’t mean you should let your guard down. In addition to the many measures financial institutions take to keep out intruders, you have to take precautions to protect your personal data and accounts. Once you know what to watch for and what tools are available to enhance your security, you can enjoy the benefits of online banking without risk.
What is online banking?
Online banking, also known as Internet banking, lets you access your accounts and make certain transactions using a computer and Internet connection. Most financial institutions, including banks, credit unions, lenders and investment companies, offer online banking. There are even banks that only offer online accounts.
You can set up your current checking/savings accounts for online banking, or you can open a new account online. To open a new account, choose your institution. Bankrate.com allows you to compare checking and savings accounts available in your area. Once you choose a bank, you can go to its website and apply for an account. Typically, you will find online applications under “personal banking.” You can open an individual or a joint account with another person. The application will ask you to:
- Provide your personal information, including name, address, phone number, Social Security number and ID, such as a driver’s license number. For joint accounts, both applicants must provide this information.
- Fund your account with an initial deposit. Most banks require at least a “minimum deposit” to start but you can add as much money as you want. You can do this by providing the account number for an existing bank account or a credit card. You may be able to save your application and send a check in the mail if you can wait several days for the account to be opened.
The bank will send you documents to sign and return. You can mail them back.
Just because you apply for your account online does not mean you will have access to online banking. As with existing accounts, you may need to visit your financial institution’s website and register for website access by providing your account details and email address, and choosing a username and password. During this process you may be asked to choose a photo and write a phrase to “authenticate” yourself and help you know you are at the right site when you log in. In addition, you may be asked to answer several secret questions in case you forget your username or password.
Generally, you can access checking and savings, credit card and mortgage accounts online.
Once your online account access is established, you can log into the system by entering your user identification (which might be your email address or username) and your password. If you have more than one account at one institution, such as a checking and a savings account, you can click on the account you want to access.
Depending on the institution and the types of accounts you have, while you are logged in you may be able to:
- check your current balance
- view account activity (deposits, withdrawals and payments)
- read and download your statements
- search for particular transactions (by date, amount, check number, or payee name)
- view canceled checks
- transfer money between accounts
- pay bills (you enter payee information and choose when the bills will be paid)
- view account terms (such as interest rates, fees and due dates)
- set and manage alerts, request a stop-payment, or order checks
- contact customer service by instant chat or secure email
TIP: Confused? Most financial institutions offer a “test drive” for online banking in the form of a video or virtual tour of the site. Watch and learn!
To end your online banking session, sign off (or log out) and close your browser. If you walk away during a session, most financial services websites will log you out automatically after a period of inactivity. Log back in to continue.
Online banking benefits
Convenience is the main reason people bank online. With direct deposits and automatic bill payments, online banking customers can avoid going to a branch or mailbox. Most bank accounts come with an automated teller machine (ATM) card so you can get cash from an ATM or “cash back” on purchases (at the grocery store, for example). And, account information is available 24/7—no more waiting for the monthly statement.
TIP: Many financial institutions issue “debit cards,” which can be used as an ATM card as well as to make purchases at stores and online. You can use your debit card with your PIN number or by signing your name.
Lower cost is another benefit of online banking. Not only can you avoid the cost of postage to mail bills, you reduce the number of checks you have to buy. And “e-accounts”—accounts that require that all or most deposits and other transactions be made electronically—often are free or low-cost, even if you don’t keep a minimum balance.
Online banking also is an environmentally friendly alternative to regular banking, since it requires less paper (fewer checks, and statements and bills can be delivered electronically) and no fuel.
Online banking risks
While there are many advantages to banking online, there may also be some disadvantages. These include:
- temporarily losing access to your account, either because you don’t have access to a computer, the Internet connection is interrupted or the institution’s website is “down”
- you miss a payment because you don’t notice the email that alerts you to your online statements
- email “phishing” and other scams to convince victims to provide their log-in information
- failure to protect your usernames and passwords, which could allow a stranger to access your account
Safer online banking
Banks and other financial institutions work hard to ensure a safe, problem-free online banking experience. But there are things you can do to increase the likelihood that your personal information will remain private and your accounts will stay secure.
Make sure that any institution you do business with is legitimate. (A fancy website doesn’t prove anything.) Start by reading about the bank in the site’s “About Us” section, and then try to verify the information. For example, call the phone number provided. Also, do an online search to find any posts about the institution, including consumer complaints.
Bookmark your bank’s site instead of typing in its Web address (URL) on each visit, as you could make a typo and end up on a “spoof” site designed to trick you into entering your login information. Before you set the bookmark, double-check to be sure you’ve typed the URL correctly.
Verify that the bank is insured. The FDIC name and logo indicate that the bank’s customers will be reimbursed for losses on their deposits up to $250,000 if the bank fails. But don’t just trust the presence of a logo on a website. Confirm that the institution is insured by visiting the FDIC’s website, where you can search by the bank’s name, city, state or ZIP code. While a bank that is not FDIC-insured may be legitimate, its customers may not be covered in case of a loss. (Most brokerage accounts, such as your IRA account, are not FDIC-insured.)
Create a strong password for your account. The longer the password, the harder it is for someone to figure out, especially if you use a combination of capital and lowercase letters, numbers and symbols. Don’t make a password out of a pet’s name, birthdate, or other personal information.
Keep your ID/username and password private. Don’t share it with anyone and don’t leave it where someone could find it. Change your password regularly; change it immediately if you think it has been compromised. Don’t allow your browser to “Remember my password” or “Remember me on this computer” for financial accounts.
Log off the banking website when you are done with your session or if you have to step away from the computer, and close the browser window after signing off. On shared computers, clear your “cached” activity by clicking on the “Tools” menu (in most browsers) and selecting “Clear Recent History” or something similar. (The words may be slightly different depending on the browser you use.)
Password-protect your home wireless network so that strangers can’t access your wireless Internet account and possibly capture the data you send and receive. Call your Internet service provider for instructions on how to do this.
Use a firewall, which is a virtual barrier between your computer and the Internet. Your computer’s operating system (OS) may have a built-in firewall; make sure it’s turned on. Update your antivirus and antispyware software to guard against new malware as it appears. (Some banks offer customers free or reduced-price virus protection software.)
Avoid online banking when using public or unencrypted wireless networks (Wi-Fi). If you must use public Wi-Fi, take precautions. Look for the closed padlock or unbroken key in the browser frame and an “s” after “http” (https://) in the Web address, which indicates an SSL (Secure Sockets Layer) connection.
Don’t send sensitive information via email, chat or instant messaging (IM).
Know how much time it takes your bank to get a payment to your creditors after receiving your online bill payment request. Some payments, typically to larger creditors, are made electronically and may reach their destination within a couple of days of your request. Payments to smaller creditors, such as your dentist, may take a week or more because the bank sends an actual check to the recipient. Leave plenty of time for payments to reach your creditors before the due date.
Monitor your account activity regularly—even daily. In most cases, you must report unauthorized account activity to the bank within a certain time period (say, within 60 days of when the transaction first appeared on your statement) for full protection. If you don’t, you may not be reimbursed for fraudulent transactions.
Check your monthly statements every month, even if you fail to get an email reminder. Place a reminder on your calendar of when to check for a new statement each month.
Phishing emails are fraudulent messages that try to get you to reveal sensitive information by making you believe you are communicating with a legitimate business. Often, these messages include a link to a copycat website, which is designed to look authentic and lure you into revealing your personal information. And remember, your bank will never contact you and ask for your Social Security number or password via email or phone.
Assistance and information
If you are already a customer, you can contact the financial institution’s customer service department for help with online banking. The following resources may be helpful when considering a new financial institution or to learn more about staying safe online.
Federal Deposit Insurance Corporation (FDIC)
www.fdic.gov / 877-275-3342
Contact the FDIC to confirm that any bank you are considering doing business with is insured.
National Credit Union Administration (NCUA)
www.ncua.gov / 800-755-1030
The NCUA administers the National Credit Union Share Insurance Fund (NCUSIF), which provides deposit insurance for credit unions much like the FDIC does for banks. Visit the NCUA site or call to find out if the credit union you’re considering joining is insured.
The U.S. federal government and the technology industry provide information and tips to promote online safety and security.
Privacy Rights Clearinghouse
The nonprofit Privacy Rights Clearinghouse offers a library of information, from tips for protecting your privacy online to how to shop safely on the Internet.
Visit Visa’s financial education program, Practical Money Skills, at: www.practicalmoneyskills.com
Your Digital Dollars - Banking Online Safely
File Name: digidollar_online_EN.pdf
File Size: 0.14MB
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Consumer Action created the Digital Dollar series with funding from Visa Inc.
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