Is Your Online Bank Safe From Hackers? Here's How to Tell

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Online banking has made money management more convenient than ever. Whether it's paying bills, tracking your spending, or transferring cash to your savings account , you can do it all on the internet. This morning, I moved money internationally, bought some books online, and paid a friend for theater tickets. All without going to a storefront or waiting in a queue.

Sadly, what's convenient for me could also be convenient for hackers. Online banks do a lot to keep us safe, but there are still risks. For example, last year, Americans lost over $23 billion in identity fraud, according to financial research company Javelin. Big-name banks, including JPMorgan Chase, Capital One, and Truist Bank, were victims of data breaches, and their clients' information was exposed.

Even so, for the most part, online banking is pretty safe. Here are five features to look for in your online bank if you want to make life harder for hackers.

1. Encryption

All top online banks use 256-bit advanced encryption. Essentially, what that means is that when data leaves your computer and floats off into the internet, it's jumbled into ciphertext that can only be decrypted at the other end. If hackers manage to tap into your data en route, they won't be able to read it.

2. Multi-factor authentication

Another way that online banks keep us safe is by adding extra layers of login authentication. In addition to a password, your bank may send a code via SMS or email before you can log in. Authenticator apps serve a similar purpose. Biometric authentication -- such as facial recognition or fingerprint confirmation -- is another way for online accounts to be sure you are who you say you are.

Depending on how many layers there are, you will see this called two-factor authentication (2FA) or multi-factor authentication. A few months ago, my cellphone was stolen. Those extra security checks meant I could sleep easy knowing the criminals could not access my accounts. If your online bank does not push you to set this up, it's a red flag.

3. Fraud monitoring

It can be frustrating when your bank freezes your account because it detects unusual activity. But that kind of sophisticated monitoring is another way banks keep you safe. Your bank's systems will notice that someone is spending money on your debit card in New York while you're tucked up in bed in Idaho.

4. Secure internal systems

Banks store your data in databases. Those databases can be a target for hackers. If criminals get their hands on your name, address, Social Security number, and more, they can use that information to make fraudulent transactions in your name.

Look for banks that have a security page and tell you what they do to keep your data safe. For example, most banks have a barrage of protections to control who can see that information and how it is stored. Banks also keep an audit trail of all transactions, so if something goes drastically wrong -- like a ransomware attack -- your bank can retrieve your details.

5. Willingness to reimburse fraudulent transactions

Some banks, such as Ally, guarantee they'll refund unauthorized mobile or online transactions as long as you report it within a set time. But don't take that kind of protection for granted. While credit cards usually have zero liability policies, some bank accounts do not. Find out what your bank's policy is -- particularly the window to report fraud and get your money back.

Keep your account safe

Hacking is a sad fact of modern life. Just as banks are constantly updating their security systems, criminals are getting cleverer about finding ways around them. In addition to looking for a bank with strong security systems, there are also steps you can take to protect your account.

• Don't reuse passwords: It can be a hassle to manage lots of passwords, but it really does make a difference. Note them down, use a password manager, or come up with your own secret system. Using "password1234" for everything is like leaving your front door open for criminals.
• Be on the alert for phishing scams: Phishing is essentially when criminals use fake communications and fake websites to trick you into sharing secret info. For example, you might click on a link in an email that takes you to a fake landing page for your online bank. If you enter your login details, the criminals will have your password. I avoid clicking links in emails and always log in to my bank from a bookmarked link.
• Use secure wifi networks to access sensitive data: There are a few ways hackers can intercept your information if you're on a public network. Try not to log on to your financial accounts from places with free wifi like your local cafe, even if you feel safe there.

There are lots of ways to make sure your online bank account is safe from hackers. Start by visiting your bank's security page and learning about how it protects your data. Set up multi-factor authentication on your account and make sure your antivirus software is up to date. The harder you can make life for cybercriminals, the less likely they are to get into your account.

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