Question: How do I evaluate the relative safety of any particular online bank? How can I make sure my account would be FDIC insured? Paul, Brooklyn, NY
Answer: There are two kinds of online banking.
The first is working with a traditional brick and mortar institution that offers a good online service. For many people this is the best option because every once in awhile they need to deal with a real banker or teller, face-to-face. But a growing number of people are comfortable with an online only bank. No bricks and mortar. In return, you should get a higher rate on your savings and a lower rate on your loans from an online-only bank. You should also get a really user-friendly website. A key issue to explore before signing up is how good the support service is if something does go wrong.
Now, you're absolutely right: You only want to do business with an FDIC insured bank. That goes without saying. A first safety measure is to type in the website yourself and see if it has the FDIC logo. You never want to click on an email solicitation, for example.
Better yet, you should check the bank out with the FDIC's online database of FDIC-insured institutions. The FDIC offers for free a brochure on what to look for when considering doing business with an online bank. The web page has a link to the database. Type in the bank, and see what comes up. A positive match will give you a lot of information, from the official name of the bank, the date it became insured, its insurance certificate number, the main office location for the bank (and branches), its primary government regulator, and other links to detailed information about the bank.
And, if your bank does not appear on this list, don't do business with it and contact the FDIC.