Seems as though every year, just as the kids are back in school and our minds begin wandering towards the holiday season, banks and other credit institutions get a case of delayed spring fever and begin shaking up their financial product lines. This year’s no different. From “branchless” banks that exist only in a virtual space to new consumer advisories for college students from the Consumer Financial Protection Bureau, the new laws that have been authored, edited, voted on and eventually passed into law continue to affect all of us. Keep reading as we explore both online banks and college debit cards so that you can go forward, armed with all the protections available.
These digital presences, known as online banks, are offering consumers impressive opportunities. Citing the absence of overhead, branch leases and bank tellers, many are saying it’s time we took that final leap and choose virtual banking. While it makes sense that lower overhead means lower banking fees, is this enough to convince people they’re actually better off choosing a bank that has no local connection – or any physical location at all, for that matter? Often, it means better returns on money market accounts, savings accounts and sometimes even credit card interest.
The next logical question, then, is just how safe are these virtual or online banks?
Brick-and-mortar banks give an appearance of safety, but they are no safer,
said Deana Arnett, a Virginia based financial planner. Of course, that rarely equates to the customer shouldering any losses due to fraud, but it also means they face those same aggravating phone calls, reports and password changes that we go through when our identity has been compromised or we become the victims of fraud.
Before You Commit
If you’re considering the benefits (and there are many), here are a few things to keep in mind as you go about the businesses of establishing an online bank account.
The absolute first thing you have to discern is whether the bank is FDIC insured. If so, it means FDIC will cover to $250,000 in deposits for each account holder. And yes, that applies to virtual accounts, too – provided the bank is covered, of course. You can find out by visiting the website. You’ll see a FDIC Insured logo if it’s protected.
There are tons of websites that mirror legitimate sites; in fact, some are so accurate, it’s impossible to tell the difference at first glance. Fraudsters will lure you in via these websites, and once you’re there and have logged in, you’ve basically handed over both your user name and password. At that point, you’ve given him exactly what he needs to log into the authentic site and use your sign in credentials.
Also, most of us can relate to typing a website address into our browser, barely paying attention because we know it by heart, only to learn we misspelled the website. Because typos can be consistent (Anywhere from 1 to 3 percent of people typing “facebook” actually type “facbook” by mistake), a scammer might buy the rights to the address where common typos put people by mistake. It’s a golden opportunity to infect your computer while also gaining access to your real account. At no time should you ever click on a link within an email since scammers methodically go through the process of planting keystroke logging software. All they need you to do is simply click the link.
Online Banking Passwords
Be sure to change your banking passwords often, too. Don’t rely on those assumptive passwords, such as your birthday or a girlfriend’s name and the year she was born (you’d be surprised at how easy it is for those looking to scam you to gain access to your password). That’s just a good habit to get into and it empowers you in your proactive efforts.
Before using your debit card, credit card or checking account information online, be sure the security is in place. Look for some sort of credential in the address bar, usually a green bar. You should also carefully craft a banking password that can’t be easily guessed by identify thieves. In addition, it’s a good idea to use one that’s unique from those used for other accounts, such as your email, and to change it regularly.
As long as you follow all these steps, you can bank online in confidence, said Arnett.
It’s a nice world in which to do banking,
You just have to think a little differently.
Scams Against College Students
It’s that time of year again: everyone’s returning to school and for college students, they are often targeted. CFPB put new guidelines in place two years ago that prohibits credit card companies from issuing their cards to college students nor may they set up a marketing booth on college campuses. Unfortunately, fraudsters have found a way to turn a profit – not in spite of the new rules, but because of the new rules.
Both CFPB and FDIC are working together to let college students know things aren’t always as they seem. Recently, CFPB was able to secure a massive fine against the issuer of one debit card college students might load their student loans or scholarship money.
Preventing Scams at College
To that end, the two government agencies recommend a few tips that can prevent these types of crimes.
Many students are saying they’re being forced to use a certain debit card or bank to hold their funds. You can’t be forced to use them and in fact, you can request a paper check be issued in person or you can request cash (though that might not be feasible for obvious reasons).
Before you leave for college, try to have those bases covered so that you don’t even have to deal with these companies. Go ahead and set up your various accounts, such as checking and or savings accounts. You shouldn’t feel obligated to do business with a bank just because it has an ATM on your college campus. If you set up your account at home, you can also benefit from the assistance Mom and Dad might provide as you prepare for the next chapter in your life. That said, many campuses allow you to sign up for direct deposit. That too can help thwart the efforts of criminals.
Finally, if you feel you’ve been treated unfairly or if you believe the policies of any bank or financial entity are wrong, CFPB encourages you to file a report with the consumer watchdog group.