Just how much should you trust your financial details with online personal finance sites that help you budget and track your spending? With all your financial information collected in one place, getting hacked could really hurt. On the other hand, the reward of keeping your finances in line could be worth the risk.
Eva Velasquez, the President and CEO of the Identity Theft Resource Center, joined us to help explain how different types of personal finance software work, and the pros and cons of letting them aggregate your information.
Velasquez started with the example of Mint.com, a popular personal finance site and smartphone app, that allows users to input all of their financial information, track their spending, and get an overlay of all their finances in order to make a budget. Services like Mint differ from more traditional personal finance software like Quicken in that user’s information is not stored only on their personal computer, but also over the internet on the services’ servers, i.e. the “cloud.”
“With these type of services, you’re putting in all of that information and storing it in one place,” Velasquez says, “So you really have to think about the level of security for that service — are you comfortable enough with the protections that they have in place in order for you to give out that information and allow them to be custodians of that information.”
Velasquez says you need to balance the convenience offered by these services against the potential risks of having your information compromised.
Also to consider is the possibility that personal finance services may want to sell the data you provide them to advertisers, a practice that Velasquez says tends to split users along a generational divide.
“If you talk to baby-boomers, the idea of having their spending habits and data aggregated so they can have marketers doing targeted marketing campaigns to them — they absolutely cringe; they are going to take their information to the grave,” she says, “You talk to millennials about that, and about the ease in which they can have advertising offers made to them that are exactly what they want, and they love the idea.”
So if you decided you are comfortable enough to use these services, what happens if the one with all your information does have a security breach, or even goes out of business? Pay attention to that Terms of Service agreement, Velasquez says.
“Most of the reputable sites and organizations will have something within their privacy policy that dictates what happens to your data in the event of either a catastrophe, a hacking, or a merger or transfer if they are sold,” she says, “That should be disclosed in their policies before you make that decision.”
To listen to all of Velasquez’s advice, click play on the audio player above.
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