Higher interest rates, low fees, and 24/7 access — there are numerous benefits of opening an online savings account. Consumers can manage all transactions from their phones with a few clicks.

But are online savings accounts safe? Generally, yes! The government and the online bank itself follow numerous security measures to protect your hard-earned money and personal information. This guide will provide further clarity:

Security Features Provided by the Bank

Reputable online banks leverage the following methods to keep your funds safe:

FDIC Insurance

The Federal Deposit Insurance Corporation (FDIC) covers deposits made at all types of financial institutions, including online-only banks. The FDIC is an independent U.S. government agency set up to promote financial stability. 

Deposits up to $250,000 (per depositor) are automatically insured – no additional fees required. 

Encryption

Online banks save and manage vast amounts of consumer data. This is why they use encryption. It involves scrambling sensitive data (like account numbers, passwords, transactions) into unreadable code (ciphertext). Online banks use algorithms and keys to protect your data during transmission. You might have seen an HTTPS symbol during sessions.

Moreover, they use end-to-end encryption. Data is protected from your device to the bank’s server, ensuring no unauthorized party can tap in. 

Firewalls 

Online banks also use firewalls to monitor and control network traffic. Firewalls act as a protective barrier between the bank’s internal server and the public network. All incoming and outgoing data is monitored and filtered. 

Online-only banks like SoFi also comply with data protection regulations and standards, such as GDPR and PCI DSS. 

Multi-factor Authentication

By facilitating multi-factor authentication, online banks add an additional layer of security to login procedures. Account holders provide an additional verification credential to gain access to their accounts. This could be a one-time-only passcode sent to your email or phone. 

Automatic Logout

Online banks also have a feature that logs you out after a period of inactivity. This will prevent unauthorized access. Online banks can also disable brute-force attacks by locking your account for a set period (such as 24 hours) after multiple unsuccessful login attempts. 

Fraud Monitoring

Lastly, online banks use software to detect and flag suspicious activity. 

What You Can Do to Stay Safe

Still feeling on the fence? Here are some additional preventive measures you can take to keep your online account secure:

• Use strong passwords. Use a mix of uppercase and lowercase letters as well as special characters and numbers.
• Change your online bank account password often.
• Make sure multi-factor authentication is turned on.
• Avoid accessing your online bank account on a public Wi-Fi. Use a VPN if you must.
• Continuously monitor your bank account for suspicious activity. If you see any unauthorized login attempts, contact your bank immediately. 
• Beware of phishing and vishing attempts. Never share your login information, passwords, or OTPs over the phone.
• Don’t click on suspicious links received via email or text. 

The Bottom Line

Online savings accounts are incredibly safe. Just make sure your online bank follows safety procedures, and you’re good to go!

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