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How To Prepare for Online Bank Access Failures

One of the biggest concerns people have about online banks is that, for many of them, you can only access them through the web. With these simple techniques, you can mitigate the severity of that risk and take advantage of their high yields without putting yourself in a bad situation.

Recent Online Bank Access Problems

First, is this even a valid concern? I think so.

HSBC’s high yield online bank system has run into a couple problems recently. First, in March, they forgot to renew their SSL certificate [3] on their UK bank website. Then just this past August, HSBC had site outage issues [4] again for HSBC Direct customers. I received two emails explaining that everything was OK, they were sorry things got all fouled up, and that they’d take responsibility for any fees or penalties that resulted from being unable to access my account. (Oh, and Nickel just told me about how they had catastrophic computer failures in 2005 [5] too!)

Does that mean you should avoid HSBC? Not necessarily, their problems aren’t uniquely there’s. It could happen to any bank. Emigrant Direct [6] had problems after a site redesign that left people unable to access their account for three or four days. That’s a long time if you need to withdraw money and it underscores one of the dangers of having all your money in a high yield savings account [7] whose only access is through the web.

Here’s what you should do to bulletproof your high yield savings account strategy, so that if you lose access to an account, your entire financial network doesn’t come to a screeching (expensive) halt.

Use A Brick & Mortar Bank

Washington Mutual [8] has a great rate, 3.75% APY, and physical locations you can go to. If all else fails and the internet implodes, you can visit a branch and still have access to your money. The fact that it’s a B&M bank doesn’t mean it’s any safer or that it’s any better than one without branches, but the mere fact is you can get to it in a pinch makes it more accessible. Physically going is your backup to online access in the event it fails.

Use One With Debit or ATM Access

E*Trade Bank [9] gives you a debit card and it’s not the only one. The debit card gives you access to your funds without the need for the web. I’m not a fan of debit cards but they make sense as a backup plan if you really need to get to funds locked up in an online savings account. You can also use the debit cards at an ATM if you need to get a big chunk of it, though you probably will face ATM fees. Again, this is a backup to online access and I wouldn’t make it your primary means of fund access.

Link External Accounts Both Ways

Just because the bank’s website is down doesn’t mean the bank itself is down, so you can still initiate transfers out of the account from your own banks. When I open a new account, as I did recently with FNBO Direct [10], I always add external transfer links to a couple other banks. One thing I will always try to do is make sure the links are two-way, meaning I go to the other bank and create the same link.

This way I can transfer money between the accounts from either bank’s transfer system (when possible, some places won’t let you link out to non-checking accounts). If I needed my funds in HSBC Direct when the site was down, I could have gone to my ING Direct [11] account and withdrawn the HSBC Direct funds that way.

Spread Assets Across Multiple Banks

The chances of a bank’s online system going down is pretty small, the chances of the online systems of two banks going down is microscopic. That’s why I’ve advocated spreading your savings across multiple online banks [12]. Right now you have so many options (WaMu offers 3.75% APY, FNBO Direct and HSBC Direct offer 3.50% APY, etc.) that you don’t have to give up much interest to spread your funds around.

With one, or more, of those techniques, you drastically reduce the impact of any one bank’s website going down. You can’t personally do anything to prevent it from happening, but you can easily mitigate the severity.