Are Online Banks Safe And Legitimate?
By now, you have probably heard about online savings account and it's high interest returns, and you're even thinking of signing up for an account yourself. To many people who are not tech savvy, internet bank accounts are something intangible and this may prevent them from reaping the benefits of having one. Some are concerned that they will never see their money again and most are not too sure about how it works. Just how safe and legitimate these banks are? Let's find out.
The issue of protection should not arise if the online bank is a member of FDIC. This is the organization that guarantees your money in normal bank accounts, and you can expect to get your money in full if your bank were to go out of business. Just look for a 'Member FDIC' logo on the online bank's website or in their product description. Some online banks put a cap to how much protection you can have. For example, E*Trade offer FDIC protection up to $100,000 and ING Direct's protection by FDIC is capped at $250,000 per person.
Many brick and mortar banks such as Citibank and HSBC are also moving towards online operation while their outlets continued to exist. This alone is a strong indication that online banks are the prevailing banking trend rather than a scam. If you are still worried, then the best solution is to open an account with only big online banks such as ING Direct which is a huge Dutch bank, or the banks mentioned in this article. Although online banking concept is still green, these online banks have stand the test of time even before they evolved into online companies.
Another popular concern that people have is whether their account will be hacked and their money stolen. Sure, they are given a username and password but technology is not something they know enough to trust. Naturally, the best way is to change your password often and keep it away from prying eyes. Do not write them on paper and do not tell anyone about them. Having a complex password that consist of letters and numbers helps, but protecting your email is also crucial. If someone happened to ask for a forgotten password to be delivered to your email to which they have access to, your account security is compromised. Also, be careful not to access your account from suspicious pages as you could be a victim of phising, which is the activity to recover your secret password using a similar looking webpage as your bank. So as you can see, a big part of online security lies in your hand, and you should be doing fine if you are careful enough.
Maybe the reason why people tend to see online banks as potential scams is their attractive interest rates compared to normal banks. However, there is a good explanation for this. Online banks merely follow a smarter business model that operates entirely on the internet. It is value added and the fact that it has low running cost compared to normal banks translates into a higher return for you.
Therefore, there is no question that online banks are the beginning of a bigger trend - trend that value efficiency and customer satisfaction at its core. If you are thinking of signing up for an account, do take advantage of ING Direct's $25 sign up bonus for new members. Signing up is easy and you can enjoy better rates in just a few minutes from now.
Originally posted 2008-10-26 07:25:17.
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