Know the risks of giving money-management apps access to your banking information

Budgeting and money-management apps and websites are incredibly convenient: they can help you track spending, save and invest, send money to friends and family, pay bills and taxes or just give you a single snapshot of your entire financial picture. However, the ways in which some services collect—and store—sensitive data like your online bank account username, passcode and transaction history could put your personal information at risk.

It’s important to understand how using apps that access your financial accounts—usually through a separate, third-party data aggregator—can increase the risk of data breaches and the ways you can protect your personal information.

Sharing data, including your usernames and passwords, has risks. Third-party services don’t have to follow the same strict rules banks do when it comes to storing and protecting your financial information—and that could mean a higher risk of your data being breached. It’s important to use caution and ensure that apps you use have appropriate policies and practices to protect the privacy and security of any information you provide, or to which using it could allow access. Key considerations include what type of data will be pulled, how long the data will be stored and how it’s going to be used. You can usually learn more by reading the app’s terms of use or by searching online.

Many banks are using more secure ways to provide your account information to financial apps. As these new protocols—often called an application programming interface, or API—become available, the need for third parties to store and use your sign-in credentials will be eliminated, and consumers will have more control and transparency over the data being shared. Your financial institution may also offer an online dashboard where you can revoke your permission for any third party to access your account information.

If you’ve been affected by a data breach, immediately reset your passcodes. Check to see if your information has been compromised by watching for notification from your bank, often by letter or email. You can also get free credit reports from the three major credit reporting agencies. Contact your banking institution to ask about any information that’s being shared with another party.