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June 11, 2024

Budget Tracking Apps: Safe or Unsafe?

Budgeting and tracking your finances can be a frustrating experience that can create a mountain of paperwork with receipts, invoices, and bank statements. Luckily, budgeting apps were created to help streamline your finances and declutter your life. You can find a variety of apps that track your expenses, your debts, and the overall balance of your finances. But how much can you trust these budgeting apps to help your finances and protect your privacy? Here are a few things to consider.

How budget tracking apps work

Budget tracking apps connect to your current bank, credit card, investment, and loan accounts to get a complete picture of your financial situation. Some apps even have connections to things like Zillow or Kelley Blue Book to track the value of your home and car. Every time you log in, the app will send an updated connection request to your accounts and pull the most recent data that shows your financial transactions, account standings, and which bills are due.

Some apps are more robust and include things like your credit score, financial goal setting, debt removal tools such as a pay-off debt calculator, and promotional credit card offers you’re eligible for.

Some apps charge a monthly fee for their services, while others have no fee but receive an affiliate commission for recommending certain financial products or services to their customers.

How safe are budget tracking apps?

The majority of budgeting apps are incredibly safe as they know a security breach of their customer’s accounts could prove disastrous for their services. A few security features you’ll see include:

  • Bank-Level Encryption: Banks will typically use 128-bit or 256-bit level encryption methods for your data, and the majority of reliable tracking apps will use these, as well.
  • Secure Socket Layer (SSL) Technology: SSL Technology encrypts personal information like usernames, bank accounts, and passwords so that they can’t be intercepted while that info is sent from one place (your bank) to another (the app)
  • Two-Factor Authentication (2FA): Two-factor authentication requires a unique numerical code to be sent to either your phone or email every time you log in. 2FA methods prevent others from accessing your account unless they have your email or phone, making it more difficult to hack into.
  • Firewall Controls: Firewalls prevent brute force attacks or DDOS attacks on websites. Both of these are methods hackers use to gain control by overloading the servers to exploit weaknesses.
  • Third-Party Audits: Some apps will have third-party security audits regularly review their data privacy to look for blind spots or vulnerabilities.

However, just because your app offers the latest level of encryption and two-factor authentication doesn’t mean you, as the account owner, are off the hook for being responsible for your account’s security. Ensure you use unique passwords for all of your accounts and regularly look at your transaction history to look for purchases that look unfamiliar or suspicious.

The bottom line

Budgeting apps are valuable tools only if you use them correctly. While many offer state-of-the-art data encryption and privacy protection, it’s up to you to maintain the accounts and stay up-to-date with how your data is used. Keep this guide handy when you’re ready to try a new budget tracking app and don’t be afraid to ask questions if you’re unsure whether it’s right for you.

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