Is online banking safe?

As a parent, it’s instinctive to worry about the safety of your kids, particularly when they’re online. Things become a bit more serious when they have an online bank account.

But is there really a reason to be concerned? Is online banking safe for you and your kids? Read on to find out more about online banking safety and how you can keep your kids and teens safe.

What is online banking?

Online banking is a method of banking that lets you make transactions electronically through a dedicated app or a website. Rather than visiting a bank in person, you can manage your account remotely using a computer, smartphone, or tablet.

While there are banks that operate exclusively online, others have a hybrid system where you can manage your account online or in person. Regardless, many online banks will let you perform the same transactions that you would in a brick-and-mortar bank. These include making deposits, withdrawing funds, making transfers, cashing checks, and applying for loans. Some go a step further to provide services such as currency exchange, certificates of deposit (CDs), and individual retirement accounts (IRAs).

The main advantages of online banking are convenience, flexibility, and (in many cases) lower fees. Even better for parents, some online institutions allow you to open a custodial account with your kid or teen as the beneficiary.

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What does online banking mean for kids and teens?

By law, someone must be an adult to open a bank account on their own. This usually means that they should be 18 years or older. However, you can open an online banking account jointly with your minor kid or teen. This allows you to share account access.

It also means that your kid or teen gets checking and savings services, and may even have ways to earn and invest through the account. Checking accounts are generally more popular for teens and kids because they come with a debit card. That said, savings accounts are great too because they help kids and teens to save and earn interest.

Ideally, you want an account that supports all the functions of a normal bank account. Your child may be the primary owner of the account and you the co-owner with the ability to monitor, make deposits, withdraw funds, and so on. Keep in mind, however, that different institutions have different rules for kids and teens. 

Spoiler alert: If you’re looking for a banking app* for kids and teens, sign up for Greenlight, the money app to help your kids learn to earn, save, and invest. Keep reading to learn more.

Are online banks safe? Safety features of online banking

How safe is banking online? Just like brick-and-mortar banks, online banks take precautions to ensure that accounts and funds are safe. Some measures that online banks take include:

• Data encryption: Prevents unauthorized access to your information, including addresses, card numbers, and account numbers.

• Two-factor authentication: Requires two steps of identification before providing access to an online account.

• Time-out: An automatic sign-out feature that automatically logs you out if you forget.

• FDIC insurance: Deposits are protected by the federal government up to $250,000.

• Fraud monitoring: Systems for detecting suspicious activity.

• Card/account freezing: Allows you to freeze your account if you suspect that an unauthorized person has access to it or if a card is lost or stolen.

Greenlight: The banking* app for kids and teens

Having a joint checking or savings account with your kid or teen at any bank is a good idea. But if you also want kid-friendly tools and guidance, consider Greenlight. Greenlight is a money management, debit card, and banking* app for teens and kids. When you open an account with Greenlight, both you and your child get your own accounts that you can manage through the Greenlight app.

Through the app, your child can learn how to earn, save, spend, and invest money. Plus, you get lots of parental controls like funding the account, setting purchasing restrictions, and monitoring activity. Kids can’t access your parent’s wallet or view funding sources.

Parents get benefits, too!

Greenlight is an all-in-one money app. The app comes complete with a debit card, kid-friendly education tools, and a chores and allowance feature. For parents, Greenlight offers the following benefits:

• Up to 1% cash back** on all purchases

• Direct deposits into your child’s account

• A parent-paid interest plan on your kid’s savings

• A chores feature that you can use to reward your kid when they complete tasks

Safety features 🤝 Greenlight

Alongside the traditional secure online banking features, Greenlight provides a wide array of safety tools to keep your account and your child’s account safe, including cell phone protection and purchase protection. You also have access to identity theft protection, family location sharing, SOS alerts, and car crash detection with Greenlight Infinity.

How to make sure your kid's accounts are safe

There are two main ways for parents to make sure their kids and their accounts are safe: setting limits on spending and knowing how transactions are processed and monitored.

Setting limits on spending

Spending limits teach your kid or teen about money management. Perhaps more importantly, they guarantee that if an unauthorized person accesses the account, they can’t withdraw or transfer funds more than the set limit. 

Know how transactions are processed and monitored

If you know how your child typically makes transactions, you may be able to identify unusual activity. For example, if they don’t have a smartphone or tablet and strictly use a debit card, you’d have a reason to worry if a transaction occurred through a mobile device. If you can identify it soon enough, you can stop or mitigate the potential loss of funds.

Is online banking right for your family?

Online banking makes it easy, quick, and convenient to manage family money. The Greenlight app takes it a notch higher by providing earning, savings, and investment tools for your kids and teens. It provides two dashboards — one for you and another for your child — where both of you can manage the account with varying access levels.

How to decide if your kids and teens are ready for a debit card & money app

Kids are generally aware and curious about money sooner than parents may think. The sooner you introduce them to finance tools like Greenlight’s app, the easier it is for them to learn how to make smart financial decisions. But it’s never too late. Even as teens, they can start using the Greenlight app and learn about how to bank online safely. Sign up today and enjoy amazing safety features.

* Greenlight is a financial technology company, not a bank. The Greenlight app facilitates banking services through Community Federal Savings Bank (CFSB), Member FDIC.

** Greenlight + Invest families can earn monthly rewards of 1% per annum, Greenlight Core and Greenlight Select families can earn 2% per annum, Greenlight Max families can earn 3% per annum, and Greenlight Infinity families can earn 5% per annum on an average daily savings balance of up to $5,000 per family. Only Greenlight Max and Infinity families can earn 1% cash back on spending monthly. To qualify, the Primary Account must be in Good Standing and have a verified ACH funding account. See Greenlight Terms of Service for details. Subject to change at any time.