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Key takeaways
Online banking is generally safe when you use a reputable financial institution that offers encryption, multi-factor authentication, and fraud detection.
Common threats include phishing scams, malware, and unsecured Wi-Fi networks that can expose your personal information.
You can help protect yourself by using strong, unique passwords and enabling multi-factor authentication on all your accounts.
Avoid logging into your accounts on public Wi-Fi and opt in to transaction alerts to catch unauthorized activity quickly.
Managing your money on your phone or computer is convenient, but you may wonder whether it’s safe. Online banking providers typically use powerful security measures to protect you, but there are still risks to be aware of.
You can protect yourself by choosing a reputable financial institution and taking a few simple precautionary steps. Here's a closer look at how financial institutions keep your information secure, what common threats to watch out for, and how to bank online safely.
Are online banks safe to use?
Yes, online banks are generally safe to use when you choose a reputable financial institution with strong security measures. Online-only financial institutions use the same encryption, fraud detection, and account protections as traditional brick-and-mortar banks. Many offer additional security features, like biometric login, real-time alerts, and two-factor authentication, to further protect your account.
The key is choosing an institution that works with regulated, established banks. For example, Chime® works with partner banks – The Bancorp Bank, N.A. and Stride Bank, N.A., Members FDIC – to hold member deposits. This means your money is held in real, regulated bank accounts, with the same safeguards that protect traditional bank accounts.
Online financial institutions also tend to invest heavily in cybersecurity. Because they operate primarily through digital channels, protecting customer data is central. Features like encryption, multi-factor authentication, and fraud monitoring often run continuously in the background to help keep your accounts safe.
How online banks keep your information safe
Just like traditional brick-and-mortar financial institutions, online and mobile banking platforms generally have security measures in place to protect your information. Here are some of the most common:
Encryption and data protection: Encryption scrambles sensitive information, like your login credentials and account data, making it unreadable to unauthorized users. This helps transmit your data securely between your device and the financial institution's servers.
Multi-factor authentication: MFA requires you to provide multiple forms of identity verification to access your account. Even if someone gains access to your login credentials, they typically won't be able to get past the second verification step.
Fraud detection systems: Fraud monitoring software uses algorithms and pattern recognition to identify suspicious account activity. These systems can alert you instantly if they detect signs of fraud.
Biometric login: Many mobile apps now offer fingerprint or facial recognition for secure, password-free access to your accounts.
Card controls: Some financial institutions let you temporarily lock your card directly from their app if you suspect unauthorized use.
Risks of online banking
Even if your financial institution has strong security measures in place, it's smart to know about the potential risks to your accounts. Cybercriminals may use scams like phishing or malicious software to attempt to access your personal information. Being aware of these threats is an important step to protecting yourself.
Here are some common risks to keep in mind:
Phishing: Phishing is a scamming technique that uses fake emails or messages that look legitimate to trick users into handing over their personal information. Scammers may impersonate your financial institution or a well-known company.
Malware and viruses: Malware is malicious software that could compromise your devices if your phone or computer becomes infected. Some malware can record your keystrokes or give hackers remote access to your device.
Identity theft: If your information falls into the wrong hands, cybercriminals could use it to complete unauthorized transactions or open fraudulent accounts in your name.
Wi-Fi security: Unsecured or public Wi-Fi networks may expose your data and increase the likelihood of hackers intercepting it. Accessing your accounts on public networks creates added risk.
5 security tips for safe online banking
Ensuring a secure online experience isn't only up to your financial institution. The tips below can help you keep your data protected from online scammers.
Choose safe passwords
Your password is one of your first lines of defense when securing your personal information. Create complex passwords using a mix of letters, numbers, and symbols. Avoid phrases tied to personal info like your birthday or pet's name.
Make your password long, since longer passwords are typically much harder for hackers to crack. Use a unique password for each of your accounts. If you have multiple accounts, a password manager can help you securely store and track all your logins.
Install antivirus software
Installing antivirus software across your devices can generally help safeguard your data. Your phone may already have built-in antivirus protection, but downloading additional software can create an added layer of security.
Look for antivirus software that bundles other security features, such as password management, firewalls, and a virtual private network (VPN).
Use multi-factor authentication (MFA)
MFA requires an additional form of verification beyond your login credentials. This verification could come as a unique code sent to your mobile device or biometric data, such as your fingerprint. According to the Cybersecurity and Infrastructure Security Agency, using MFA on your accounts makes you 99% less likely to be hacked.
MFA is an easy way to boost your security when banking online. Enable MFA across your accounts – you can usually do this in your account settings.
Avoid public Wi-Fi
Public Wi-Fi networks are often unsecured and may be prone to interception by hackers. While there's less cause for concern when browsing social media at a coffee shop, accessing your online accounts is a different story.
Avoid logging in to your accounts when connected to a public Wi-Fi network. Connect to a secure, password-protected Wi-Fi network instead. If you must access your account on the go, use your phone's cellular data rather than Wi-Fi.
You can also use a VPN to encrypt your Wi-Fi connection and secure your data while you're away from home.
Opt in to account alerts
Many financial institutions will send you alerts via email or text message when your balance dips below a certain amount or if a large purchase is made. When you opt in to these alerts, you can immediately report any potential fraud or unauthorized purchases on your account.
If your financial institution doesn't offer account alerts, keep a close eye on your account activity by periodically checking your transaction history. This way, you can proactively spot any unfamiliar activity and report it right away.
How to tell if an online bank is legitimate
With so many financial institutions available, knowing how to identify a trustworthy one is essential. Here are the key things to look for:
Check their partner banks: Many financial technology companies – including Chime – work with established, FDIC-regulated banks to hold customer deposits. Look for information about their banking partners on the company's website or in their disclosures.
Use official apps and websites: Only download mobile apps from official app stores, like the Apple App Store or Google Play. Access your accounts through the official website, not links in emails or text messages.
Look for security features: Trustworthy financial institutions typically offer features like encryption, two-factor authentication, and fraud monitoring. Check their website or app for these protections.
Research reputation: Look for reviews, news coverage, and ratings from trusted sources. Established companies will have a verifiable track record. You can also compare the banks with the best security features to find one that meets your needs.
Safeguard your accounts with simple security steps
Online banking is a popular option because of its convenience. While security risks exist with any online activity, simple security measures – like choosing complex passwords and avoiding public Wi-Fi – can help you avoid them.
By taking an active role in protecting your data, you can embrace the benefits of online banking while minimizing your security risks. If you have a Chime account, learn how to boost your account security using the Security Center.