Safely Linking Bank Accounts

Posted: April 15, 2024

The digital age has brought us many things: social media, e-books and streaming services. It’s also changed the way we live our lives, from online shopping to food delivery apps, GPS directions to virtual meetings.

One of the most significant—and convenient—innovations of our time is online banking. Online banking has evolved from checking your balance online to connecting bank accounts, whether they’re at the same bank, different banks or third-party apps. The goal of connecting your accounts is to make it easier for you to manage your money, but many people still have questions about the security of linking accounts.

Linking accounts at the same bank

It’s not uncommon to have multiple accounts at the same bank, e.g. checking and savings. It’s simple to link these accounts on your bank’s website or app and makes it easy to transfer funds from one account to another. Some banks also provide incentives for people who link these accounts, like waiving monthly maintenance fees or overdraft fees.

Linking accounts at different banks

Some people maintain financial accounts at different banks; for example, they may keep their checking at one bank and their mortgage at another. It is possible—and perfectly safe—to keep accounts at separate banks but link them so you can easily move money between them. Many banking sites allow users to check information for both accounts in one place, but may have processes in place regarding how transfers can be made.

Linking accounts to third-party apps

Third-party finance apps like Venmo, Zelle, Cash App, PayPal and PocketGuard offer consumers alternate ways to manage their money, whether it’s to transfer money or track and manage spending. Though these apps are secure and safe to use, they do access sensitive information like bank account and credit card numbers. They don’t have the same kind of secure backing found at banks, but some are protected by the Electronic Fund Transfer Act, which protects consumers against unauthorized transactions.

Before you connect a third-party app to your bank accounts and credit cards, do your homework. Make sure the app is reputable and offers protection against unauthorized transactions.

How to link accounts

Linking accounts at the same bank is typically done automatically and simply requires a single sign-in to your bank’s website. Linking external bank accounts requires additional information and may vary by financial institution. In general, it’s smart to follow these steps:

1. Gather relevant information, like account numbers, routing numbers and logins.
2. Log in to your bank’s website or app and find the option to link or add an external account. The option may be on the dashboard or in settings.
3. Select or type in the bank or financial institution you want to link.
4. You might need to log in to the other bank you’re linking.
5. Complete the verification process, usually sending a small deposit to confirm the accounts are linked.

The safety question

So, is linking bank accounts secure? Banks and credit unions utilize a variety of features to ensure safety, including:

• Transport layer security encrypts data, preventing hackers and cybercriminals from accessing your personal and account information.
• Tokenization involves exchanging data by converting it into tokens, which hide private information.
• Multi-factor authorization requires users to verify their identity using a numerical code sent to via text or email, PIN, fingerprint, or facial recognition.

Even with these safeguards in place, it’s important to take precautions when it comes to sensitive information. Keep passwords and PINs private, use two-factor authentication whenever possible, and research third-party finance apps before linking your accounts.

Still have questions? Contact us for more information.