Is the bank account link secure?

You may have come across the option to link multiple bank accounts or link your account to a third-party finance app while you are online banking. Linking a bank account is a way to make trading between the two easier, but there may be other unexpected benefits. It is generally safe.

What does a Linked Bank account do?

Generally, the purpose of linking two bank accounts is to allow for a larger movement between the two, facilitate the transfer of money, split direct deposits, and automate savings. Depending on where your account is, there may be other benefits to doing so.

Link your bank account to the same bank

Many consumers have multiple types of bank accounts with the same bank, such as savings accounts, checking accounts and money market accounts. You can transfer between accounts from the same bank, but taking additional steps to link accounts can help you avoid certain fees.

Some banks may need to meet a minimum balance across their entire account, but linking your checking account to a savings account at the same institution may result in a waiver of monthly maintenance fees.

Another fee that linking your account can help you bypass is the overdraft fee. Banks may offer the option to link savings accounts and checking accounts that can act as a backup to cover amounts beyond what is available in checking accounts. In that case, instead of paying for overdrafts, the funds will simply be withdrawn from the linked savings account. This may require you to sign up for overdraft protection. This may also come with an additional fee.

You may also need to link your checking account and savings account before automating your savings.

Link bank accounts from different banks

You may have a checking account at one financial institution and a savings account at another financial institution. An external link is required to make it easier to transfer money between the two, such as by providing funds to a newly opened account.

Creating transfers between linked accounts can be done externally, usually for free. However, please note that it can usually be delayed up to three days. You can also make some of your payrolls enter each account so that you can set up split direct deposits on linked accounts.

Is the bank account link secure?

Banks and credit unions usually use a number of security measures to ensure that bank accounts can be linked securely. These safeguards include:

• Transport Layer Security: This will encrypt data transmitted over the Internet, making it impossible for hackers and other cybercriminals to see personal information when they are shared electronically between banks.
• Tokenization: This process safely exchanges data online by converting sensitive information into hidden tokens.
• Multifactorial certification: This requires identity verification through multiple channels, including providing pin and fingerprint verification.
• Biometric authentication: Many agencies are now using biometric data (fingerprints, facial recognition, or voice IDs) to add another layer of protection that is much more difficult to replicate or steal.
• Fraud surveillance system: Advanced monitoring tools continuously analyze transactions in real time to detect suspicious activity, alert you if a fraud is suspected or freeze activity.

Still, it’s important to keep your personal information safe, such as your password, account number, and pins. Keep this information confidential and always use multifactor authentication if it is optional. Do not share this information with anyone, including service representatives.

Is it safe to link your bank account to a third-party app?

There are many finance apps that require you to link your bank account to them. These apps can help you automate savings, track your spending, and analyze your account for unnecessary fees and subscriptions. While many apps provide thorough security measures to protect your information, not all have the same level of security as banks.

Many reputable financial apps have security features to ensure protection against unauthorized transactions. For example, PayPal uses extensive security measures to protect your bank account or credit card number. Depending on the nature of the transaction and whether you are a buyer or a seller, PayPal will also provide full coverage of fraudulent transactions for your investigation.

Some apps are also protected by the Electronic Fund Transfer Act. This protects consumers from unauthorized transactions that are carried out electronically. The law protects peer-to-peer (P2P) payments, such as those made through Benmo. If money is fraudulently taken from your account, you can be liable for less than $50 as long as the transaction is reported within two days. Within 60 days, you may be liable for up to $500, and then you may be liable for the full amount.

Before linking your external bank account to a third-party app, make sure your app is reputable and provides protection against fraudulent transactions. Check ratings on the App Store and Google Play, read developer verification, reviews, read apps, and use encrypted data storage and other powerful security and privacy tools to investigate whether your app has a strong reputation.

Benefits and risks of linking bank accounts

advantage

• You may be able to use your linked account as overdraft protection to avoid overdraft fees.
• Some banks will waive monthly maintenance fees when linking another account.
• Transfers between accounts are easier and there is no need to pay wire transfer fees.
• You may be able to take advantage of financial features such as automated savings and split direct deposits.

risk

• Banks insured by federal deposit insurers (FDICs) have built-in security measures to protect your information, but some third-party apps may not be as thorough. For example, multifactor authentication may not be provided.
• Linking your bank account to a third-party app means publishing more personal data within the app. That data could be vulnerable to potential data breaches. For example, in September 2022, FinTech Revolut reportedly experienced a data breaches and published data for more than 50,000 users. However, Revolut responded quickly, and the funds were not breached.

How to link a bank account

If you have multiple accounts set up for the same bank, the bank will often automatically link these accounts. Otherwise, you can ask your bank to link these accounts.

To link an external bank account, follow these steps:

1. Collect the information needed for the external bank account you link to. This includes your account number, routing number, and login information.
2. Log in to your bank’s website or mobile app and find the option to link your external account to your dashboard or settings.
3. Select or enter the financial institution you want to externally link to.
4. You may be asked to log in to your external bank account and provide your account number and routing number.
5. Banks may ask you to complete the link verification process before your account is fully linked. This is usually provided in the form of small temporary deposits made by the bank to an external account. Check your account activity and make sure your deposit was created successfully.

Conclusion

Linking a bank account can serve multiple purposes, whether it is funding overdrafts in another account, waive certain fees, or making it easier to transfer between accounts. Linking your accounts is generally safe, but beware of lesser known third-party financial apps and do not share your account login and personal information.