Are Online Banks Safe? Well, They Are Safer Than You Think!

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Are Online Banks Safe? Well, They Are Safer Than You Think!

No one really likes standing in the long queues of the bank for hours and getting their work done. To be very honest, no one really has the time to do it either. There is no chance that you can visit the bank during your office hours, so what you are left with is the weekend. And do you really want to go to the bank on weekends, too, when the institution only operates for given hours? Well, this is where online banks come to the rescue. However, when things go online, it is common for people to ask are online banks safe.

Well, this is actually a legitimate concern. No one feels safe enough when it comes to taking their money online. However, online banks are safer than you may think. Not only are they safe, but they are also easy, convenient, and hassle-free. Online banks would also offer you interest rates, which would easily leave all of the competitors in sheer dust. With keeping money in cyberspace, the safety question would definitely be an issue you need to cater to.

So, let us now see what are online banks and why they are one of the safest options you can think of.

Contents

What Is An Online Bank?

Online banks are those financial institutions that operate fully on an online basis. They do not have any branches. Therefore, you just need to manage your money from your computer or from your phone. However, you can just occasionally stop at an ATM whenever you need cash.

This model of operations allows online banks to save a lot of money while running the business. Therefore, these banks pass on these savings over to the customers in the form of higher annual percentage yields and, of course, a lower fee.

Apart from just these, they are also pretty much the same as your everyday traditional bank. And just like any other traditional bank, online banks also take big measures to protect your money. So, you can rest assured that your money is in safe hands.

Are Online Banks Safe? Well, Here’s How Online Banks Protect Your Money

There is nothing more that you want than keeping your money in safe hands. So, you are going to take a breath of relief that both online and physical banks take the same measures to protect your money. These measures include protection against bankruptcy and protection against hackers.

Therefore, there is a guarantee that your money is not any less safe than how it would be in a physical bank.

FDIC Insurance

The Federal Deposit Insurance Corporation protects all consumers against the failure of banks. All of the accounts available in online banks come with FDIC protection. If there is a case where the bank goes out of business, the FDIC will cover up to $250,000 for every account in each of the banks.

Joint accounts have insurance of up to $250,000 per co-owner for each bank. So, if a married couple opens an account in an online bank, they will receive insurance of up to $500,000.

If you are going for an online credit union rather than going to an online bank, you will not be receiving any FDIC insurance, however, it still would have protection. Credit unions get the coverage from the National Credit Union Association, and they have pretty similar insurance options.

Encryption And Two Factor Authentication

Are online banks safe? yes through encryption and two-factor authentication. Encryption is one of the most effective ways to protect your money from online hackers. Online banks make use of the exact 256-bit advanced encryption standard that all other traditional banks do. This is the same protection system that the army uses to protect all of their confidential information.

However, encryption alone cannot protect you from the hands of the hackers. Hackers can easily sneak into the accounts by pretending to be you. Their tricks may include guessing all of the weak passwords or just sending you a phishing link that would trick you into handing over all of your sensitive information.

That is why many of the online banks come with two-factor authentication. This is a bonus on top of your usernames and passwords. It generally means entering a code that comes in your phone. Allowing two-factor authentication makes it pretty tough for anyone to break into your account.

How Would You Know If An Online Bank Is Legitimate

The safety of an online bank comes majorly with its legitimacy. So, if you are planning on taking the service of an online bank anytime soon, take these steps to make sure that you are working with a legitimate organization.

Check Out The Website And The Customer Reviews

Whenever you come across an online bank, look around the web for anything that feels off. Go through its “About US” page for any obvious errors, like misspellings. Wrong spellings are a bad sign. This shows that the website was developed in a hurry.

Look around for any customer reviews. If there are none, or if all of them claim that the bank is a scam, just stay away.

See If It Is Providing FDIC Insurance

Every legitimate online bank is bound to provide customers with FDIC insurance. This is a big factor that contributes to the legitimacy of the bank. This can give out all the information if the bank is safe.

Look Around For The Security Measures

Every online bank takes great measures to protect their customers from theft or getting hacked. So, you need to see how serious this website is about the protection of its customers. If you cannot find anything of work, ask the bank directly. If they are not transparent about customer protection, you would know that this is the time to step back.

Ways To Keep Money Safe While Online Banking

With the tremendous growth of cybercrimes, your money can never be 100 percent safe. However, there are a few steps that would make sure that you are at least being safe while banking online.

  • Always type the bank’s web address in your browser
  • Never do the bank related work on a public wifi network
  • Choose a very strong password and periodically change it
  • Always use the two-factor authentication
  • Keep the activity alerts on

The Bottom Line

Are online banks safe? Yes. They are. There is nothing that you have to worry about while you are banking online. They are so convenient and easy that you would never want to step foot in a bank.

However, you need to be aware enough to make sure that you are not engaging with a fraud website that pretends to be an online bank.

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Upasana is a budding journalist who has a keen interest in writing. She considers writing as therapeutic and is most confident when she writes. She is passionate about music, movies and fashion. She writes in a way that connects with the audience in a personal level. She is optimistic, fun loving and opinionated.

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