Is It Safe To Link Bank Accounts? 7 Risks You Need To Know

Is It Safe To Link Bank Accounts? 

In most cases, it is safe to link bank accounts. Linking bank accounts is as safe as any other banking activity, especially if you’re connecting accounts between reputable financial institutions. 

Banks and financial institutions use a host of modern security features to safeguard your funds and privacy, such as:

• Biometric verification reduces the risk of account takeovers, as banks will only grant access to your account after you provide your unique features — like fingerprints or facial recognition.
• Two-factor authentication (2FA) is a security measure that requires users to enter a one-time code received via SMS, authenticator app, email, or push notification — along with the user’s account password.
• Fraud monitoring systems constantly watch your accounts for unusual activity and alert you to anything suspicious in near real-time.
• Transport Layer Security (TLS) ensures a secure and encrypted connection between your device and bank servers for safe data exchange. With tokenization, banks replace sensitive data, like your account numbers, with unique tokens.

When linking bank accounts isn’t safe is when you give suspicious apps or services access to your bank account. 

If you're unsure what safety measures your bank offers, you can check online or call a branch to ask. Also, remember that you may need to contact more than one bank if you're linking accounts at different financial institutions.

What Happens When Bank Accounts Are Linked? 

Linking bank accounts occurs when you connect two or more accounts — such as your checking and savings accounts. Once linked, it's easier to transfer funds, set up regular deposits, and manage your money.

Here are three scenarios in which you may be asked to link bank accounts:

• Linking accounts with the same bank. If you have different accounts with the same bank — such as checking, savings, credit card, and investment accounts — you can link them to make transfers easier (and sometimes cheaper). Some banks waive monthly fees when you link accounts, or even allow you to bypass overdraft fees by using your savings to cover expenses beyond what’s in your checking account. 
• Linking your accounts across different banks or credit unions. By linking accounts from different financial institutions, you can review account information (including balances, account numbers, and transactions) in one place. For example, you may use one bank for its high-yield savings account and another for its checking account. 
• Linking your bank accounts with third-party apps. Many finance apps require you to link a bank account. These apps can help you automate savings, track spending, invest in money market accounts, or analyze your account for unnecessary fees and subscriptions. 

Connecting bank accounts between U.S. banks and fintech apps, like Venmo, is common practice in 2024. However, keeping your accounts unlinked makes it harder to move money between them. 

Another thing to keep in mind is your coverage from the Federal Deposit Insurance Corporation (FDIC). The FDIC insures the total of all your bank accounts at the same bank for up to $250,000 [*]. If you have more money across all of your checking and savings accounts with one bank, it may make sense to set up multiple FDIC-insured accounts at different banks for full protection of all your funds.

7 Risks of Linking Your Bank Account To Other Apps and Services

1. Your personal and financial information could be sold or shared

Linking your bank account to a third-party banking app may disclose more information than you think. Typically, a linked fintech service, social media app, or gaming platform will gain access to your personal details, credit, and purchase history.

Some third-party apps and services sell personal information to advertisers and data brokers. There's also an ongoing risk that a third party holding your data could be the victim of a data breach.

Why this matters: Advertisers will target you with more ads if any service sells or shares your personal information with data brokers. If your banking information is leaked or stolen, your personally identifiable information (PII) could end up on the Dark Web. At that point, fraudsters can easily target you with scams or steal your identity. 

💡 Related: How To Protect Your Bank Account From Identity Theft →

2. You’re more vulnerable to sensitive data breaches

A data breach is a cyberattack that compromises sensitive, confidential, or otherwise protected data. Unsurprisingly, 93% of data breaches are motivated by financial gain [*].

Hackers often target financial institutions and government organizations, as they know they can access valuable banking information, such as account details and login credentials.

Whenever you link your bank account to unknown apps and services, you create a larger attack surface, giving threat actors another entry point to discover your data or potentially access your accounts.

Why this matters:  If your login information is exposed in a data breach, someone could seize your passwords and take over your online accounts. Once inside, they could drain your savings, make fraudulent transactions, or fund other criminal activity. 

💡 Related: Here's What To Do After a Data Breach [2024 Update]

3. Your transfers might not be covered against fraud

The Electronic Fund Transfer Act (EFTA) is a federal law that protects consumers when they transfer funds electronically — which includes debit cards, automated teller machines (ATMs), and automatic withdrawals from a bank account. Under the EFTA, you have limited liability for fraudulent transactions on your account. 

However, you must be vigilant if anything happens to your card. The EFTA has limitations — if you don’t promptly report a lost or stolen card, you may not be fully protected against fraud down the line.

Why this matters: If you link your bank accounts, you might lose coverage. You need to carefully review the terms of each app and service you connect in order to ensure that you stay in compliance with the EFTA regulations. Otherwise, you may be left on the hook for debts if you become a victim of fraud.

4. Your accounts could be hacked and emptied

In most cases, when criminals have access to your financial accounts, they empty them almost immediately. However, there are exceptions. 

Synthetic identity theft is a long-term con in which scammers create fictitious identities by combining stolen details (from several real people) with fake details. For example, someone could combine your Social Security number (SSN) with a made-up date of birth and name.

The perpetrators can use the synthetic identity to open new accounts and build a higher credit score by making repayments for months or even years. Eventually, these con artists qualify for much larger lines of credit under your name, which they can use to fund serious criminal activity or simply empty all of your accounts at once. 

Why this matters: If you lose your savings, you might never get your money back. Dealing with the fallout of identity theft and financial fraud could take a toll on your life for a long time. To make matters worse, you could be embroiled in a legal battle to clear your name if the imposters used your account for money laundering or other crimes.

💡 Related: Have I Been Hacked? How To Recognize & Recover From a Hack

5. You could still end up paying fees

Often, linked banks automatically transfer funds from one account to another to maintain a particular balance — or when you have insufficient funds to cover a direct deposit or scheduled payment. With this setup, there's a risk of fees being charged to your account, even if you didn't authorize the disbursement. 

To avoid this risk, it's essential to carefully review the terms and conditions of any app or service that you use to link your bank accounts. You should also be cautious when clicking on links or pop-ups that may lead to additional charges.

Why this matters: This practice can become problematic if it causes your savings account to fall below the minimum balance. You could lose overdraft protection and face further charges on your account. Worse still, you may run into problems with creditors and lenders if you miss important scheduled payments, like your mortgage. 

6. You may miss out on higher interest rates

According to Statista, prices in the United States increased by 3.4% between December 2022 and December 2023 [*]. Whenever the cost of living increases, saving smartly becomes more critical for Americans.

Savings accounts with a higher annual percentage yield (APY) help you grow your savings faster than if you keep your money in standard checking accounts. But when you link your accounts, you may miss out on the potential for higher returns on your savings. 

Why this matters: When interest rates are low, you earn less on your savings and fixed-income investments. In the long term, this setup between your linked accounts will impact your overall income and financial goals. 

7. It’s harder to keep your savings separate

Linking your bank account to third-party apps and services can make it harder to keep your savings separate. While viewing all your money together may seem more convenient, it can lead to a more complex financial management system. 

You could lose track of your savings or accidentally transfer funds between accounts. Without a clear system that prioritizes saving money each month, many people spend beyond their means and find themselves living paycheck to paycheck. 

Why this matters: When the temptation to use your savings is ever-present, you’ll find it harder to build financial security for the future. In the long term, this approach could impact your plans for retirement or buying a home, or leave you without a safety net if you lose your job or face expensive medical bills. 

How To Link Your Bank Accounts Safely

If your checking and savings accounts are at the same bank, they are often linked automatically, making it easy to transfer money instantly. If you want to link accounts at two different banks, the transfer may take a day or two to complete.

Follow the steps below to link your bank account with another financial institution or trusted third-party app:

• Collect important details. Before linking accounts, you must have the account number, routing number, and login details.
• Log in to your main bank. You can log in through your main bank’s website or mobile app. In the settings, find the option to add an external bank account. 
• Provide the account details. Enter the routing and account numbers of the bank account that you want to connect.
• Verify the new connection. Your bank might ask you to prove you own the other account. For example, you may have to pass some multifactor authentication (MFA) steps; or your bank may send a small, temporary deposit to the external account. Once you provide the required information, the linking process will be complete.

How To Protect Your Bank Account From Hacking and Fraud

Linking bank accounts is generally safe, but any integrations between unsafe third-party apps can leave you open to fraud or data breaches. While your bank will do what it can to keep you safe, this is not always enough.

• Check the terms and conditions of any service with which you share your financial details. It’s important to understand how apps store, use, and protect your personal and financial information. Consider the fees, charges, interest, and costs that apply to your accounts and services. Also, familiarize yourself with potential restrictions on account activity and your liability for any losses or damages.
• Don’t give out your account numbers, passwords, PINs, or one-time-use codes. Sharing this sensitive information with unauthorized service providers puts your accounts at immediate risk. You should always keep key banking details private — not even bank employees need to know your PIN or online banking password.
• Make sure you’re using a strong and unique password for each of your online accounts. When linking your bank account with another financial service or third-party app, always use a unique and complex password for each financial account. The harder it is to guess or brute-force, the harder it is for hackers to gain access.
• Enable two-factor authentication on all apps, services, and accounts. Two layers of defense are better than one. When you set up 2FA with biometrics or an authenticator app, you can stop unauthorized access to your accounts.
• Never click on links in unsolicited emails or texts. Many scams start with a bogus email or text message from someone purporting to be from your bank. TV producer Andy Cohen was duped by this scam in late 2023 [*]. You should always avoid links and attachments in unsolicited emails, as they could install malicious software on your smartphone or computer.

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