Checking safety of Internet banks

whiteman

Thursday May 24, 6:00 am ET

Don Taylor

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.

To ask a question of Dr. Don, go to the \"Ask the Experts\" page, and select one of these topics: \"financing a home,\" \"saving & investing\" or \"money.\"

FROM: http://biz.yahoo.com/brn/070524/ ... f=banking-budgeting