Fears over the solidity of banks have surged in recent months. According to a new poll by GOBankingRates, 70% of Americans are concerned about the safety of their money in bank accounts.
Why are the vast majority of Americans feeling this way and is their concern valid, from a finance expert’s perspective? Additionally, what are some appropriate steps one might take to quell their anxiety and ensure the safety of the money they keep in banks?
The Collapse of SVB Set Fears in Motion
The collapse of Silicon Valley Bank in March is largely what triggered recent rising concerns over the security of banks. But it isn’t the first time Americans have expressed worry.
“Following the 2008 recession, people trusted banks and financial services the least in comparison to other industries,” said Christopher Colley, global head of industry advisory, financial services at Qualtrics. “While sentiment towards banks has gone back to neutral in the years since the crash, the recent string of banking failures at Silicon Valley Bank (SVB), First Republic and Credit Suisse has put customer trust on unsteady grounds — and customer concerns are running high as a result.”
Concern Is Valid, But Not Necessarily for the Reasons You Think
Here’s the scoop: If your bank is backed by the FDIC (most are) and you have less than $250,000 acrossall of your accounts in the bank (this is the maximum amount the FDIC insures) then your money is guaranteed safe and you will get it back if your bank fails.
All of this said, threats are real, and you should always practice safe behaviors in relation to your bank accounts.
“The prevalence of cybersecurity threats and the evolving tactics used by cybercriminals make it imperative for individuals to prioritize the security of their financial information,” said Adam Garcia, CEO of The Stock Dork. “Data breaches, phishing attacks, malware and hacking attempts are all real and persistent risks in today’s digital landscape. These threats can lead to significant financial losses, identity theft and long-lasting repercussions on personal credit and financial stability.”
Spread Money Across Different Banks
Your first step in practicing bank-safe behavior is to keep money in multiple accounts (in different banks) if you have more than $250,000.
“It is important to diversify any bank savings across institutions if your deposit balance exceeds $250,000,” said Jennifer White, senior director of banking and payments intelligence at J.D. Power. “This is the FDIC protection limit, and shifting deposits reduces your risk of losing your bank savings. If you are not familiar with FDIC and how it works, now is the time to do some research or ask your bank about how this covers your deposits.”
Use Complex Passwords
Did you know the most commonly used password in the U.S. is 123456? Yikes! Stay far, far away from this and other passwords that are exceedingly easy to figure out.
“Choose a unique and complex password by combining uppercase and lowercase letters, numbers and special characters,” said Robert Siciliano, CEO of ProtectNowLLC.com. “Avoid using easily guessable information like your name or birthdate or consecutive numbers. Consider a password manager software.”
Set Up Two-Factor Authentication (2FA)
Federal law actually requires banks to provide the option to enable 2FA. This builds in an extra layer of security.
“This typically involves receiving a verification code on your mobile device or email or identifying a photo or identifying the device itself, in addition to your password, when logging in,” Siciliano said.
Monitor Your Accounts
You don’t have to be paranoid, but you should always keep an eye on your bank account transactions and statements.
“Review them frequently to identify any suspicious or unauthorized activities,” Siciliano said. “Set up push notifications or push alerts to get notified of any and all transactions in real time. If you notice anything unusual, report it to your bank immediately.”
Look Out for Phishing
Garcia highlighted the very real threat of phishing. Stay alert.
“Be wary of emails, phone calls or messages that ask for your bank account information or personal details,” Siciliano said. “Never click on links or download attachments. If there is a link to be clicked or a download to be made, all of it can be done in your account when logging in directly on the web. Legitimate banks will never ask you to provide sensitive information through email or text.”
Secure Your Devices
The onus of protection doesn’t just fall on you, it also falls on whatever device you’re doing your online banking on.
“Install antivirus software on your devices, including computers, smartphones and tablets,” Siciliano said. “Keep your operating system and applications up to date to benefit from the latest security patches.”
Use Secure Networks When Online Banking
Though it can be tempting, you should avoid accessing your bank account on public Wi-Fi networks, as they could be unsafe connections.
“Use secure trusted networks, such as your home or mobile network,” Siciliano said, “and consider using a virtual private network (VPN) for added protection.”
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