Have you ever thought of the world without the internet? Unthinkable, right? The benefits this technology has unleashed are far more useful than the drawbacks. However, these drawbacks, as little as they may be, appear to cause a lot of frustration. For instance, job losses occasioned by task automation is just one of them.
Then there are hackers that cause sleepless nights for many website owners. Nevertheless, we still continue to enjoy the fruits of the internet, including online banking.
Two decades ago, this was unimaginable, yet here we are enjoying every moment of it. Think of attractive interest rates you crave for. How about peer-to-peer lending that doesn’t require a bank? The possibilities are endless but there’s one disturbing question, “are the online-only banks trustworthy?”
The question of trust has been around since the introduction of the internet. It continues to be a key concern, especially when hackers devise new methods to beat firewalls set up by online banks and lenders.
While the database security is the responsibility of the financial institution, it’s also your responsibility to make sure your credentials are safe and secure so as to prevent any form of a security breach from affecting your data.
Here are simple tips you can follow to make sure the information you share online remains safe and secure.
1. Ensure all Deposits are Insured by the Federal Government
Insurance exists to protect whatever you want it to. In this case, your money is the main subject. Usually, insurance is your first line of defense. However, the company that offers insurance also requires insurance to protect itself and the customers under it.
This is where the Federal Deposit Insurance Corporation (FDIC) comes in. The corporation protects your money should the online-only bank, or any other financial institution for that matter, go under. However, note that the FDIC offers protection only for funds up to $250,000 for an account.
While this may be a loss for a customer with over $250K, it’s better to get this amount than nothing. Also, if you’re not sure if your preferred lender is insured by the FDIC, consider checking their website.
2. Identity Thieves
Also known as identity fraud, this is a method used by cybercriminals to obtain important personal information such as driver’s license number or Social Security number to impersonate the victim. Technology came with a lot of benefits, but the damage it can cause is undeniable if the wrong hands get a hold of crucial data. Almost all transactions are done online and with cybercriminals lurking on the side, all your data must be encrypted.
For example, when accessing the lender’s site, make sure the site’s address contains a key or a lock icon. This shows all data shared within site is encrypted and that a thief will have an uphill task trying to steal your information.
3. Keep an Eye Out for Cloned Sites
Hackers have an array of tools at their disposal to get the job done. One of them is cloning websites. This method involves creating a website similar in appearance. The URL will differ slightly, often, unsuspecting victims won’t even note the difference. Besides, how many times do you confirm the letters in the URL? Next to none, right?
Once you’re in the cloned website, the hacker will be able to view any information shared within site. With this, they can do as they please with it. Therefore, don’t be too quick to enter information. Confirm you’re in the right location first.
Also, you may be lured into sharing your personal information through an email. This is the most used con method by hackers by far. It’s also the earliest method of transmitting viruses and other malware. Therefore, you must exercise patience and restraint when handling unknown emails.
4. Create a Strong Password
Your banking password is one of the critical credentials used to log you into the system. Cybercriminals are keen to steal this piece of information, which is why you must create a strong password. One that is difficult to crack.
Often, many people use their birthdays, Social Security number, or street address as their password. This is a terrible mistake and cyber experts strongly advice against this move. Many people even use 1,2,3,4,5.
Instead, consider creating a password at least 8 characters long. Make sure you have a number, a capital letter, and a symbol among the characters. Sometimes creating such complicated passwords may be problematic when it comes to remembering them.
In this case, consider creating a password associated with a big event in your life such as your college graduation. If you graduated from Fine Arts College in 2018 December, you could create the password 2018&FAC_DEC.
Also, don’t use one password for all your accounts for obvious reasons. Once a hacker obtains this password, all your accounts associated with the password will be compromised. You could also investigate the many password managers out there. Finally, make an effort to change your password at least twice a year.
Why they Can Afford to Offer High-Interest Rates
Profit margins in any company are determined primarily by operational costs. The less the overhead, the higher the margins. Vice versa is also true. Take for example an online store that doesn’t have to think about rent, which is the case for brick and mortar stores.
The same applies to online-only banks. According to a financial advisor from realisticloans.com, they offer higher interest rates compared to other lenders because they have a low overhead. They don’t need to populate cities with branches and fill them with employees.
Their interest rates may still be way lower than other lenders —0.84% to 1% but that’s not because of the actions or inactions of the online banks, but because of those of the Federal Reserve when they set low prime rates.
Security may not be a Priority
Simply using logic, you’d be correct to believe online banks are most vulnerable when it comes to security breaches. However, according to financial planners, the truth is brick and mortar banks aren’t any safer than online banks.
A method known as encryption secures both their data and yours. By encrypting data, it becomes next to impossible for hackers to access the information.
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