Expert: Steve Hach - 11/5/2007

Question
I have noticed that the rates for cd's are a lot higher for online banking than at local banks in my area..I was looking at cd bank rates in califorinia, which were very high, but I am skeptical about giving my information to someone I can not even see..what are your thoughts about online banking and privacy?

Answer
Frank,

As long as the usual internet protocols are followed, I see no issue with privacy and security when banking via the internets.

It should be pretty easy for you to make sure that a bank is legit merely by doing some additional research.

These two websites are full of info from people that look for good rates via the internets:

fatwallet.com

bankdealsblog.com

A recent article in the NY Times discussed how to find good returns on money "rate chasing" and the link to it is here:

http://www.nytimes.com/2007/10/13/business/yourmoney/13money.html?_r=3&ref=busin...


However, please be advised that even if you find a legit bank you can run into trouble.

My boss recently put his accounts into an online bank because it offered such good rates only to see the bank go under!

Of course, he followed the number one rule, so he was fine--ALWAYS put the money into an FDIC facility!

He got his money back no problems--the bank was only off-line for 2 days or so.

I think that as long as you are internet savvy you should have no issues with security or privacy.  And if you really want to make sure or are worried about sending private data via the net you could always call the bank and give them the data over the phone.

Or, you can probably download the forms and send them via snail mail or fax to the bank if you want to be careful--but what if someone steals the data from the mail?


I recently set up both an online banking account as well as a stock trading account and I had no issues and found the process pretty simple.

Just be careful and remember that if the deal sounds too good to be true you should be careful and cautious.

Best,

Steve