As our digital world expands, so does the threat of cyber-attacks. From identity theft to surprisingly sophisticated phishing schemes, cybercriminals are constantly devising new ways to access and steal your hard-earned money. And it’s not just individuals being targeted – the institutions that safeguard your assets and personal information are also frequently fending off cyber threats. This is why it’s essential to take proactive steps to safeguard your finances. This guide will help you understand the risks on an individual and institutional level and provide practical measures to protect your finances from cyber threats.
Understanding the Risks of Cyber Threats for your Finances
Recognizing the risks is the first step toward protecting your finances. Cyber threats can come in many forms, including:
- Phishing Attacks: Fraudulent emails or messages that trick you into revealing personal information.
- Malware: Malicious software that can infiltrate your devices and access sensitive data.
- Ransomware: A type of malware that locks your files or systems until a ransom is paid.
- Identity Theft: When someone steals your personal information to commit fraud or other crimes.
Larger institutions can also be impacted. Banks and other financial institutions are prime targets for cybercriminals due to the vast amounts of money and personal data they hold. A successful attack on a large institution like a bank can lead to:
- Data Breaches: Exposing your personal and financial information to unauthorized parties.
- Service Disruptions: Making it difficult or impossible for you to access your accounts.
- Financial Losses: Both for the institution and potentially for you if your assets are compromised.
Protecting Your Finances From Cyber Threats
Stay Within FDIC Insurance Limits
The FDIC insures deposits up to $250,000 per depositor, per insured bank, for each account ownership category. Ensuring your deposits are within these limits can protect your money if your bank is compromised.
Action Steps:
- Review Your Accounts: Check your bank accounts to make sure your deposits do not exceed the FDIC insurance limit.
- Distribute Your Funds: If you have more than $250,000 at one institution, split your money between different banks to maximize FDIC coverage.
- Keep a Separate Cash Buffer: Even if you don’t exceed the FDIC insurance limit of $250,000, relying on a single bank can be risky if that institution falls victim to a cyber attack. Consider diversifying your accounts across a couple of banks to mitigate this risk–or at the very least, keep a smaller buffer amount at one bank while the bulk of your cash savings are parked at a different bank.
Strengthen Your Cybersecurity Practices
Enhancing your personal cybersecurity measures can significantly reduce the risk of falling victim to cyber-attacks.
Action Steps:
- Use Strong Passwords: Create unique, complex passwords for your financial accounts and change them regularly. Once a year is a good rule of thumb. Lastpass and 1Password are great password management tools that help you generate complex passwords automatically and log into your account quickly by auto-populating your user IDs and passwords.
- Enable Two-Factor Authentication (2FA): Add an extra layer of security to your accounts by enabling 2FA. I’ve personally been grateful for 2FA after I received a notification that someone was trying to log into one of my old software accounts. I was then able to take action and change the info on the account.
- Monitor Your Accounts: Regularly check your bank statements and transaction history for any suspicious activity. I once caught a fraudulent charge on my credit card this way. I scanned my transactions and saw that I had spent some money at a homegoods store in a city in upstate NY, even though I had never been there. I got on the phone with the credit card company and had them reverse the charge, shut down the card, and send me a new one.
- Verify Links (in Email or Text) Before Clicking, and Don’t Give Personal Information Over the Phone: These days, scammers will send convincing text messages telling you that an Amazon delivery has been rescheduled and to click the link for more info. on’t! Always double check the source, and play it safe. If you get a call asking for personal information, refuse to give any until you can be given proof that it’s a legitimate institution following the proper security procedures. Nobody should be calling you and pressuring you to give personal information, not even your own bank.
Plan for Institutional Failures
In the event that your bank or financial institution is compromised, it’s important to have a contingency plan.
Action Steps:
- Know Your Rights: Understand the protections offered by your bank and the FDIC. For instance, most banks have FDIC insurance for assets up to $250,000. Some institutions are covered by SIPC insurance, and insure assets up to $500,000.
- Back Up Important Information: Keep copies of important financial documents and account information, such as security keys (strings of letters and numbers to back up passwords) or answers to security questions in a secure location, whether in an encrypted online file folder, or a safe place in your home.
- Regularly Update Contact Information: Ensure your bank has your current contact details so you can be notified quickly in case of a breach.
Protecting your finances from cyber threats requires vigilance and proactive measures. It’s simply the nature of the increasingly digital world in which we live. When people kept large amounts of cash in their homes, they had risks like property damage, loss and theft to consider. Now that our money is mostly virtual, we have new risks to consider, like password strength, malicious links, and service disruptions. Stay vigilant, stay informed, and take all of the steps above to ensure your money remains secure.
Brandon Tacconelli is the Director of Client Care at Thinking Big Financial, Inc. Thinking Big is a fee-only financial planning firm in New York City specializing in working with the LGBTQ+ Community.