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BVC #5: Bank Account Firewalls
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This episode of the Bargaineering VideoCast will discuss a concept I call Bank Account Firewalls.
ING Direct no longer has the top interest rate among online banks but no other bank makes it easier for you to start new accounts. They are the ideal candidate for a bank account firewall because of this simplicity but you can use any account at any bank.
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I remember you talking about this before. It’s a good idea and something I definitely never thought about.
Wow. I haven’t heard of this idea before. Seems to make a whole lot of sense to me.
I’m eager to see if anybody chimes in with any drawbacks to it. If not, I’ll be setting one up shortly.
Thanks!
I’d never heard of this but it’s a great strategy with the way the internet scams all seem to come about today. I link all of my accounts to my main savings account, having never realized the vulnerabilities I’m exposing myself to. Thanks for the suggestion, great idea!
I’ve been doing this for a while, but with one additional firewall level.
Phishing and hacking endanger not just your PayPal account, but your ING account as well. If your ING account was compromised, the villain could access the funds in your main account, your firewall account and all your other ING accounts, AND any outside accounts to which you have set up direct links with transfer capability.
I have my main savings accounts at separate institutions, where the only transactions that occur are my direct deposit coming in, and EFTs I push to my ING main account as needed for on-demand funds. I feel safer with my “operational” accounts not being tied to my actual savings accounts; my ING account is unaware of my savings accounts. I also like how this system means having very few transactions involving those savings accounts.
I’d appreciate any feedback you have on this variation on your account firewall system.
From what I can tell, your system adds an additional layer. If your ING account is compromised, you are still in the same position as if your Paypal account fails. In your system, your ING is outside the firewall with a separate account as your firewall, it’s not important that there are two levels to in the outside system.
Am I understanding your setup correctly?
Your layout is an excellent way to limit loss in case of security breach in the outside accounts (Paypal, AcctX, AcctY). Essentially, my system is identical to yours, but with an additional account layer which limits loss if the breach is at the ING level. (In the diagram, my real savings account would be on the right side with a one-way arrow going through a dotted line to the “ING Main” account.)
If somebody was able to get into the ING Firewall account, they would then also have access to the ING Main account because those accounts are linked within ING. They would not be able to get to my real savings account, though, because there is no link; I only EFT funds to the ING Main account as needed.
Could my real savings account be hacked? Sure, it’s possible, but I don’t think it’s as likely. I think the accounts I’m using to interact with the outside world are at substantially higher risk of being compromised.
I enjoyed the video, both the message and the media. It was well done and simple. The concept seems to make sense – but I let me make sure I get it… the PayPal account is linked to the ING account – right? That’s the risk – if the PP is compromised – then the bad guy can pull $ from the ING account. This wouldn’t help if the ING firewall account itself gets compromised right – because it has a link to the real ING account.
Is your ING Firewall account a savings account? And if it is do they have a limit on how many transfers per month?
I’m also unsure as to what specific account your ING Firewall account is. As far as I know, ING has savings, checking and CD accounts.
It can be anything, but I use a savings account. The point is that you have an account with only a few dollars, the actual type of account is less important.