Is Online Banking Safe?


Of all the questions that we see on our Online Banking discussion board, the most frequent is probably, "Is this safe? With all these viruses and computer hackers that I keep seeing cheesy movies made about, can I really feel comfortable leaving all of my financial information inside of my computer? CAN SOMEBODY, ANYBODY, PLEASE HELP ME?!?!?"

Okay -- we're not too crazy about the use of the ALL CAPS writing, but we certainly understand why the question is raised so frequently. Online security is -- and probably should be -- the top concern of consumers. Accordingly, online banks are pretty focused on it, too.

Most online banks will have a portion of their website devoted to explaining the measures that they employ to protect the security of your transactions. Many online banking systems employ the direct-modem connection, so those transactions are not even transmitted over the Internet. If you are making banking transactions that do take place over the Internet, make sure that your bank is using high-end encryption.

Encryption is the process developed by super-genius computer nerds to scramble data so that only the intended receiver can use it. The higher the number of bits in an algorithm, the more sophisticated the encryption. For example, a 128-bit algorithm is the encryption level used by AOL's Banking Center. 128-bit encryption methods are also the highest level of security currently allowed by U.S. law.

Is 128-bit encryption enough for you? Well, 128-bit standard is so powerful that the U.S. government currently does not allow the sale of it overseas. (Though Canadians are allowed to download it. But should we really trust our friends up north that much? Hmmm....) Stealing information that is encrypted at that level is virtually impossible -- even if it does seem awfully easy when you watch those movies about those genius basement-dwelling unemployed computer hackers. Just ignore the movies -- they aren't exactly accurate.

What you should pay attention to is whether or not the security measures are operating while you're making your transactions. Depending on what browser you use, you'll either see a closed padlock icon or a key icon to demonstrate that security is operating. When you see these, you'll know that your transaction is being encrypted -- and accordingly, you should feel quite safe about what you're doing.

Additionally, online banking services feature passwords and personal identification numbers (PINs) that you select. Your PIN needs to be given every time you make a transaction within your account, and you can change your PIN as often as you'd like.

While concerns about online security will always be there, rest assured that the banks themselves have a very, very high stake in making you feel comfortable about the level of security being used. While it may be true in this world that nothing is perfectly safe, online banking is certainly as close as offline banking in providing safety in your financial transactions.

Find out what online banks others use on our online banking message board.

Next: Banking Tools »« Previous