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 Dear
Dr. Don,
I am very scared of "giving my money away" on
an Internet bank account. How can I be assured that my money has really gone
where it was supposed to and not to some con artist?
-- Robin Record
 Dear
Robin,
Bricks and mortar don't make your local bank any
safer than the one on the information highway. The
audit trail that documents the transactions in
your account, combined with banking laws and regulations,
protects you from larceny or fraud better than
the proximity of a branch ever will. You're looking
for the same attributes in both when it comes
to the safety and security of your savings.
You want to have your deposits insured
by either the FDIC, the Federal Deposit Insurance
Corp., or NCUSIF, the National Credit Union Share
Insurance Fund. Both forms of deposit insurance
carry the full faith and credit backing of the
U.S. government behind the insurance for insured
deposits.
You also want to consider the financial
institution's safety rating. Bankrate publishes
the Safe
& Sound CAEL rating. Bankrate also
provides a financial institution's Star rating
on the Rate
Search page when you're shopping for a new
bank account.
Risk-averse
investors look to bank safety ratings as a "belt and suspenders" approach
to managing risk. Uninsured depositors look to bank safety ratings to evaluate
whether the increased yield is adequate compensation for the increased risk.
The FDIC has an electronic pamphlet,
"Tips
for Safe Banking Over the Internet,"
that puts a finer point on some of the issues
and concerns surrounding Internet banking. Take
some reasonable precautions concerning deposits,
computer security and who you bank with, and you
should be fine.
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