Tips For Keeping Your Financial Data Safe Online

By Jonas Elmerraji AAA

We live in an increasingly online world. You can trade stocks, buy groceries, pay bills - almost any financial transaction you need to make can be done in the comfort of your own home, at your computer. With identity theft posing a real threat, though, keeping financial data private requires that consumers be proactive in the way that they approach online security.

The Rising Wave of Identity Theft
According to the Privacy Rights Clearinghouse, 9.3 million Americans fell victim to identity theft in 2005; and while this number has been decreasing slowly since then, identity theft still poses a serious threat.

In response to this problem, scores of companies have come up with services designed to protect against ID theft. Even though paying a company to safeguard your ID can be effective, following some guidelines to keep your private financial information safe online is both free and easy. (To read more about online scams, see Identity Theft: How To Avoid It and our Online Investment Scams Tutorial.)

10 Tips to Keep Your Information Secure
Here are 10 tips that you can use when you're online to keep your identity safe.

  1. Only Make Purchases On Trusted Sites
    When deals seem too good to be true, they just may be - you might be paying as a victim of identity theft when you make purchases on websites that aren't secure. There are lots of small online retailers that don't have adequately secure payment systems. The best way to make sure that your information doesn't get intercepted is by simply sticking with trusted, well-known online retailers, or smaller sites that use reputable payment processors like PayPal or Google Checkout. Regardless of which site you use, you should always make sure to look for the padlock icon on the bottom of your browser to verify that the page is safe.
  2. Order Your Credit Report
    Your credit report is your window into your ID security. The Fair and Accurate Credit Transactions Act, passed by the Federal government in 2003, mandates that each of the major credit bureaus supply consumers with a free copy of their credit report each year. You can get yours at AnnualCreditReport.com (American users only), a website run by the credit reporting agencies to comply with this legislation. Your credit report allows you to see whether someone has opened new accounts under your name. (To learn more, see

    The Importance of Your Credit Rating.)

  3. Know How to Spot Phishing
    Phishing is a technique used by identity thieves to get your sensitive information by pretending to be a site you trust. Phishing schemes are successful because you believe that you're just signing into your bank or credit card account, when it's really a ploy to get your important information. When logging into these accounts, make sure that you're not being asked for any information that you usually wouldn't be required to provide to log in. Social security numbers and addresses are often red flags. Also, check the url of the site. If you're accessing a Bank of America account at a web address that isn't at bankofamerica.com, it could be a phishing site.
  4. Secure Your Network
    If you have a wireless network at home or work, make sure that you secure it. A hacker can gain access to anything you do over an unsecured network in a matter of seconds. If you look at the documentation for your wireless router, you'll be able to find out how to lock your router and encrypt your information. It won't affect the way you use your wireless network, but it will keep intruders from getting a hold of your info.
  5. Can the Spam
    Be very leery of "spam" (or junk email) that works its way into your email inbox. Not only are these messages often from phishers, but they can also contain Trojan horses (viruses) that can get into your computer and send your information back to their unsavory creators. If you have the option, install spam-filtering software (or ask your email provider whether it can add spam-filtering to your account). Not only will this cut back on going through your daily pile of junk email, it can also keep your data safe.
  6. Don't Store Sensitive Information on Non-Secure Websites
    As more and more useful web applications start springing up (like Backpack, Facebook and Google Calendars), it's important to make sure that you're not storing sensitive data on non-secure websites. While online calendars, to-do lists and organizers are really useful, make sure that your account numbers and passwords don't make their ways onto these sites, which often aren't protected the same way a banking or brokerage website would be.

  7. Set Banking Alerts
    Many financial institutions are beginning to offer email and SMS alerts when your accounts reach certain conditions (being near overdraft, or having transactions over $1,000, for example). Setting alerts for your accounts can ensure that you find out about unauthorized access as soon as possible.
  8. Don't Reuse Passwords
    As tempting as it may be to reuse passwords, it's a really good practice to use a different password for every account you access online. This way, if someone does find out what your password is for one credit card, they won't also be able to access your checking, brokerage and email accounts. It may take a little more organization to use different passwords for each site, but it can help marginalize the effects of unauthorized access to your accounts.
  9. Use Optional Security Questions
    Like with using different passwords for each account, it's a good idea to set up optional security questions to log into your accounts. Many financial institutions ask security questions that a third party wouldn't know, but you can often set up multiple optional questions that can increase the security of your account. Remember to use questions that don't have answers available by public record. For example, choose questions such as "What was the color of your first car?" over "What city were you born in?"
  10. Don't Put Private Information on Public Computers
    If you're away from home, make sure not to save private information onto a computer used by the public. If you're accessing a private account at the library or cyber café, make sure to log out completely from your accounts, and never choose to save login information (like your username or password) on these computers.

Taking Identity Theft Seriously
These days, identity theft has become commonplace, and people are even afraid to use their own personal computers to access any financial information or purchases online. You can do those things without being taken advantage of by making sure that you keep yourself safe online. (If you think you've been the victim of identity theft, see Identity Theft: What To Do If It Happens for what to do next.)

Identity theft is a big deal that affects the lives (and credit scores) of millions of people each year. Taking just a few extra precautions online can help you keep from being another statistic.

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