The Internet makes life much easier in many ways, but if you’re planning on doing your banking online, you do need to take some precautions to avoid losing money.

Internet banking has become so popular now that it’s possible to completely avoid setting foot in your bank once the account is set up. Some banks will even let you create your account online, without having to be physically present, making it that much easier to do everything from your preferred location. You can even bank with your phone these days.

Online banking is an excellent way to go for many reasons:

  • Lets you handle your finances while in another country, or from any location
  • Allows easy access to financial data from any computer
  • Lets you work and transfer money at any time of day without leaving your office or home

However, it can sometimes be very dangerous to use the Internet for your financial transactions. There’s the risk of having your identity stolen, as well as bank accounts being drained, if you aren’t careful. Fortunately, it’s fairly easy to stay safe while banking online, if you know what you’re doing.

Checking the Bank

How certain are you that the bank you want to do business with online is real? A very common scam involves sites setting up a bank related website though it isn’t actually associated with any financial institution. For this reason, your best bet is to simply go to the bank you are interested in and open up an account in person. When you do this, you will be given the correct website address and you’ll know that the site is legit.

It isn’t always possible to set up an account in person and the ability to do so online is one of the main reasons some people choose online banking. If you are going to go this route, there are a few things to check before you sign up with the bank.

1. Check that the bank is insured by FDIC

2. Watch out for fake URLs that are very similar to the real bank

3. Read the Privacy Policy carefully to find out what they do and do not share

4. Check the “About Us” section for info on the physical location of the bank

Some banks are not insured by the FDIC because they aren’t located in the U.S. There are other dangers to banking outside your home country, so be aware of the rules before you consider it. It’s a good idea to understand exactly where your bank is located and under what laws it falls.

Keep Your Information Private

Identity theft is one of the biggest issues with revealing too much about yourself online and a bank website could be a big problem if it isn’t properly secured. It’s very important to read the bank’s privacy statement before you start using it. This will tell you exactly what the bank can and cannot share from your information.

Most bank websites require you to input a PIN or password. It’s best to choose something that isn’t going to be obvious to a hacker, so stay away from birthdays, family names or phone numbers, etc. which are all very easy to guess. You should also avoid sequences of numbers like “1234567,” one of the most common passwords in the world. Hackers can get through these very easily and will have access to your personal and financial information.

You will also want to make sure that the site is encrypted, which makes it far more difficult (usually impossible) for anyone to get any information off of it. Look for the little lock symbol in the lower right corner of your browser, or, if you use Chrome, in the search box. This means that the site is protected against attacks. In some browsers this will be a key instead of a lock.

Viruses and spyware can also record your password if you don’t keep them off your computer and they can be picked up from just about anywhere. An infected email, a website or even a music download can infect your computer and make it unsafe to do anything private online, including banking. The best way to circumvent this issue is to have a very good anti-virus/spyware program installed on your program. Use it to scan your computer every few days to be sure you haven’t accidentally picked up a virus.

Finally, don’t trust any emails that you receive from the bank, as these may be phishing scams. If you think it might be legit, open a new page and type in the bank URL rather than clicking on the link in the email. From there, you can check out the truthfulness of the email. Often these emails will have an urgent message, such as “Your account is about to be closed” or “Urgent Account Notice,” etc. These are designed to make you panic and click on the URL, which takes you to a site identical to the bank’s site, but is really just designed to grab your password.

As long as you exercise care, there’s no reason not to use online banking. It’s faster, easier and beats standing in line for twenty minutes just to transfer some money, but you do need to be careful to avoid any potential problems.