How to Keep Your Financial Information Secure

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Keep Your Financial Information Secure
What are you doing to keep your financial information secure? The Information Age has streamlined much of modern life. But it’s also exposed us all to the risk of security breaches. It’s not just the fraudulent use of our accounts anymore. The frequent and casual passing of information that we do every day exposes us…

What are you doing to keep your financial information secure?

The Information Age has streamlined much of modern life. But it’s also exposed us all to the risk of security breaches. It’s not just the fraudulent use of our accounts anymore. The frequent and casual passing of information that we do every day exposes us all to identity theft, the loss of privacy, and the loss of important data.

Fortunately, there are simple, commonsense steps you can take to keep your financial information secure. Financial information is now being passed in many ways. You have to seriously consider the various things that may compromise your information during your everyday activities.

Use Dual-Factor Authentication

Commonly referred to as two-factor authentication, dual-factor authentication is basically a process that adds an extra step to the login procedure. This makes it more difficult for hackers and identity thieves to get into your accounts and applications.

Most accounts and applications require you to provide a username and password. But users typically keep these simple to make it easier on themselves. It’s even common to use the same passcodes for multiple apps and accounts.

But guess what — you’re also making it easier on the hackers and thieves who can often figure it out.

Dual-factor authentication adds an additional step to the sign-in process. It creates a second security layer that basically requires you to reconfirm your identity.

You may have seen this on some of your accounts when you have to answer a security question on top of supplying your username and password.

However, the best practice is not to make the answers to your security questions easy or simple. The more complicated – and private – your answers, the more effective they’ll be as a security measure.

Create Secure Passwords

Even though it’s easier to remember simple passwords, they’re usually the easiest to hack. Any password that uses basic identifying information, such as part of your name, your children’s names, your pets, or your address, is information that’s readily available to hundreds of people.

If you’re in the habit of using the same passcodes for multiple apps and accounts, you’re making a hacker’s job even easier.

This is where it’s important to remember that many security breaches are “inside jobs” where the breach is perpetrated by a friend, a family member, a neighbor, or a coworker. For this reason, you should make sure your passcodes are always unusual. And if an application or account will provide you with a scrambled passcode, that’s even better.

Use Password Managers

A password manager serves as a central repository for your various passcodes. If you’re going to use unique passcodes for every application and account that you have — and particularly if you’re going to use complex passcodes — a password manager is a must.

A password manager will keep a record of all the various passcodes you use. This will make it easier for you to use unique and complicated passcodes. The information is stored on an encrypted database, and you’ll have to have a master password in order to access the manager app.

Password managers are commonly available with antivirus software. You can also find free options online such as KeePass.

Download a Good Antivirus Program

No matter how careful you are in managing your data, hackers are always one step ahead of you. One wrong URL and you can invite a virus onto your computer.

An antivirus program will keep that from happening. And if that does happen, it will often assist you in removing the virus.

Viruses aren’t a problem simply because they interfere with the functioning of your computer. Many are also created to harvest data from your computer that can be used by thieves.

Get and Use a Shredder

Despite the fact that an increasing number of important documents are now being transmitted over the internet, it’s almost impossible to completely avoid paper documents.

These can be some of the biggest points of vulnerability in keeping your financial information secure. This is because paper documents typically include generous amounts of personal information that can identify you and be used to access various accounts.

You should make it a practice to save only the most critical documents. Anything less – like monthly statements or random pieces of correspondence – should be scanned and saved on secure media and the actual physical copy destroyed.

The best way to do this is to use a shredder. Simply throwing documents in the trash is completely inadequate, since a would-be identity thief isn’t beyond rooting through your trash.

Make sure that you properly dispose of documents for your whole family, too. Believe it or not, children can also be the victims of identity theft.

Use a Locked Cabinet or Safe for Important Documents

If you do have to retain important documents, they should be stored in a safe or a locked cabinet drawer.

Never leave them lying around loose where an unintended party can have access to them. Remember again that identity theft is often an inside job. A person close to you could end up being a thief.

The best way to protect yourself — and to keep the people around you honest — is to store important documents out of sight. At the same time, be sure to keep the number of important papers you have to an absolute minimum.

Shop Online Using Third-Party Payment Services

Although credit cards come with solid buyer protection plans that can protect you in a disputed purchase situation, they aren’t the safest way to shop online – or anywhere else, for that matter.

The problem is that anytime you use a credit card, the information on your credit card account is available to the person on the receiving end. This isn’t a problem if the merchant is reputable. But it could turn into a nightmare if the merchant has bad intentions.

The merchant could potentially use your credit card information to gain access to your personal identity. That can create an even bigger problem than a fraudulent charge.

You can get around this by shopping using third-party payment services such as PayPal and Google Wallet. Your bank and credit card information is on file with the third-party payment service, but it won’t be made available to the merchants you’re making purchases from.

The payment services have various protections in the event of fraudulent charges, but they don’t provide your bank and credit card information to sellers. It’s even a good idea to consider using the services when making non-online purchases as well.

Unfortunately, identity theft is often perpetrated by the employees of various merchants. Third-party payment services reduce that possibility considerably.

Use Cash for Small Transactions

This may seem completely basic – or even annoying – but using cash to make purchases eliminates any chance of security breaches. That’s because cash is untraceable. When you make a purchase with cash, there’s no paper trail and no information on your part that’s left behind.

This may be inconvenient if you’re making major purchases, particularly if you’re looking to get cashback rewards on credit card purchases. But on smaller purchases, it makes abundant sense.

The last thing you want to do is risk compromising your identity as a result of purchasing a $4 latte or a $2 soft drink. By paying in cash, you’re preventing a would-be thief from gaining access to your bank or credit card account for a truly minor purchase.

Be Careful Using Your Cellphone & Public Wi-Fi

Have you ever heard someone yapping on their phone in a perfectly public place loudly enough for at least 20 people to hear them? Don’t be that person!

People like that assume that the strangers around them have no interest whatsoever in what they’re saying. But if you aren’t careful with this, you could be handing inside information to a would-be thief.

Never give out account information, passcodes, or any information that can identify you personally while blabbing on the phone. If you do have to pass sensitive information to another person, it’s best to do this by text.

In addition, if you’re in the habit of using the same passcodes for various accounts and applications, you could be handing a stranger the key to your entire online and financial lives.

The same thing goes for accessing secure websites on public wi-fi networks. There are ways for cyber-thieves to steal your information over insecure networks.

If you must use a public wi-fi network, you’re better off using a Virtual Private Network, or VPN, which provides a more secure method of surfing the web.

The Bottom Line

Keeping your financial information secure is mostly a matter of changing a few habits and using common sense. It’ll be a good investment of your time and effort, since it can prevent you from experiencing a complete disaster.

And in case the bad guys do break through your first line of defense, it helps to have backup. Click here to read how a free personal finance app was able to spot a nearly impossible-to-find scam on a credit card account.

What do you do to keep your financial information secure?

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About Kevin Mercadante

Kevin Mercadante is professional personal finance blogger, and the owner of his own personal finance blog, OutOfYourRut.com. He has backgrounds in both accounting and the mortgage industry. He lives in Atlanta with his wife and two teenage kids and can be followed on Twitter at @OutOfYourRut.

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