May 31, 2016

The Dangers of Online Banking

In an ideal world, each and every one of us could log into our bank accounts online and enjoy a risk-free banking experience. Many of us today are actually lulled into a false sense of security when it comes to online banking, and this is especially true when we bank with larger, nationally recognized institutions. However, there are some dangers associated with online banking, including when using larger and smaller institutions alike. You should be aware of these dangers and take actions where necessary to minimize your risks.

Logging In

Many banks and credit unions today allow their customers to log in to their accounts using information that is rather easy for others to access, such as their social security number as a log in or user ID. This is information that, while you likely do your best to protect, is also easily obtained through your employer, other banking institutions, and more. Further, many financial institutions do not require a security-enhanced password that includes capital and lower case letters as well as numbers in the password, too. Some even allow your security question's answer to match your password, which makes it very easy for others to access. While you likely cannot change your bank's log in procedures, you can ensure that your log in ID is unique and different from your social security number, and that your password is security-enhanced.

Emails From Your Bank

If you bank online, you can bet that there are thieves out there who want to gain access to your account information. Some have developed and sent out emails to bank customers that look exactly like the same emails your bank sends out to you. They may have the same font, logo, and an intelligent message instructing you that you need to log in to your account now. These are messages that will ask you to click the link in the email. However, the link will be a bogus link that allows thieves to gain access to your account information. Unfortunately, banks can do little to prevent criminals from sending out these emails, and so it falls on your shoulders to make educated decisions about which links to click. When in doubt, always manually type in your bank's website address into the browser rather than clicking on a link provided.

Tracking Your Available Cash

With online banking and especially with mobile banking, it is very easy to log in to your account and see how much cash you have available to spend. You may see a high dollar amount and think it's OK to splurge on a shopping trip or a nice night out. Yet online banking doesn't always reflect withdrawals and other charges to your account that are pending. You may have mailed out a few checks last week that haven't cleared yet. The restaurant or gas station that you made charges at yesterday may not have posted. It is very convenient to use online banking as a reason not to balance your checkbook, but you do want to establish some method of tracking your own spending rather than rely on online banking for an up-to-date picture of your account status.

Online banking is very convenient, and in many ways it does save people like you and me a significant amount of time and effort. With features like bill pay and automatic drafting for savings and investments, there is a lot to love about online banking. However, there are some dangers with online banking, too. By being aware of these dangers and taking precautionary steps, you can prevent yourself from the hassles and expense associated with these dangers.

David Spader writes about the best saving accounts over at

Leave a Comment