How to Keep Your Financial Information Safe

If you bank online, be sure to take these precautions.

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Now more than ever, consumers are banking online, spending online, and paying bills online. As a result, we often store our financial data online to simplify these processes. While it is much easier to have our data stored so we don’t have to enter our logins each time we want to access our accounts, is it really safe?

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We all carry vital information like credit cards and checking account information in our purses and wallets each day, so it stands to reason that storing information online is no less dangerous. In reality, someone can have access to our financial and personal information at any time by stealing our wallet or hacking our online accounts. However, consumers are still gun-shy about entering personal data in online resource.

The Changing Trend

Banks are now really pushing the trend to turn customers into using online services. They offer incentives to customers who use online resources to get more people to switch so they can do away with paper statements and some of the traditional services. Many promote the switch as a way to ‘go green’. However, not all customers are buying into the ideas of electronic anything. They prefer to stick with paper checks and statements each month rather than risk being victim to an online scam. Online shopping sites offer discounts and deals you can't find anywhere else.

Online Options

When you shop or pay bills online, you typically have to enter your bank or credit card information into the merchant or service providers account each time you want to make a transaction. Some merchants will allow you to store your data on their system for later but you do run the risk of having a merchant you are not familiar with use your data inappropriately or illegally. While most reputable companies will guarantee protection against fraud, not everyone on the Internet is reputable.

To prevent your increased risk of passing out financial information to every online business, you can select from one of several popular options for safer online transactions. Three of the most popular sites include:

[Visit the U.S. News Personal Finance site for more insight and money management tips.]

Paypal: This site is owed by eBay and it is one of the most versatile choices available. You can establish a Paypal account and link it to your bank account, credit card, and debit card. When shopping or paying bills online, you can enter your Paypal credit card, debit card, or account information so no merchant will have direct access to your financial accounts or personal data.

Google Checkout: This site was established to be a competitor of Paypal but is not as popular. You can use the site to store credit card numbers and shipping addresses for easier checkout.

Bill Me Later: This site is also owned by eBay but works on a pay-later system if you don’t have the cash on hand. The system requires the last four digits of your Social Security number, your bill address and birth date. The site will run a credit check for verification purposes and you’ll receive a bill in the mail or via email that lists your expenses.

By using one of these resources or other online sources, you can reduce the exposure of your personal information to too many people. Choosing the right tool should be based on personal opinion on which site will work best for your needs. In order to help decide between one of the three aforementioned sites or to select another virtual tool to manage your payment information, you’ll need to check out each site and compare its features.

What to Look for in a Money Management Website

Fraud Guarantee

One of the first things to look for in a money management resource is the terms and conditions for fraud protection. Not every site will offer complete coverage in the event something should go wrong. Read the fine print or contact each company to get the low down on the fraud protection being offered. It is suggested that whichever resource you use, you connect the account to your credit card which offers fraud protection that banking accounts do not.

[See: Avoid These 5 Major Money Mistakes.]

Options for Payment

Out of the three sites, Paypal does give the most options for payments but you’ll need to decide exactly what you need before making a choice. Not everyone will need the bells and whistles Paypal offers. You also need to ensure the company you choose will be accepted by merchants internationally and will be useful in electronically paying bills and managing your money as it suits your needs.

Eligibility and Features

You’ll need to weigh the pros and cons of each website for your own needs. You also need to make sure you would be eligible to set up an account. Some sites, like Bill Me Later, run credit checks so not everyone would qualify for the account. Sites like Paypal also offer additional features like the Paypal credit card but again, good credit is required to be eligible for such features.

Overall, managing your finances online is convenient and becoming more necessary as businesses go paperless. Provided you ensure you are protected and you check into the sites you are providing financial information to, you will find the ease and incentives of online financial transactions to be a safe and secure way to manage your data.

Pinyo is the owner of Moolanomy Personal Finance Blog, which covers a wide range of personal finance  and investing topics, with features that include reviews, comparison guides, and Q&A sections.