Financial tracking websites that let you monitor your accounts with different banks have been in the news this month, over concerns that banks have been temporarily cutting off the flow of data to such companies.
Mint.com and other aggregators sites are popular among people who like having one place to view multiple accounts and get a bigger picture of their finances. A variety of these startups have launched in recent years, as more people bank online and via mobile devices.
In order for such sites to work properly, they must be able to access your account information pretty frequently. But that isn’t always happening.
For its part, Charlotte-based Bank of America might limit the flow of data to aggregators when online-banking traffic from regular customers spikes, a spokesperson said. Other banks have reportedly disrupted data flow to aggregators recently.
Here are five things consumers should know about these financial-management tools:
1. They offer a variety of services for free or at low cost. Those services let you track everything from your retirement accounts to your credit score. One of the newer players is Digit.co, which launched this year.The free app is designed to scrutinize your spending to identify small amounts of money you can save. Digit transfers that money from your checking account every two to three days. The catch? Digit keeps the interest earned in your Digit account.
2. Some banks already offer similar services. Bank of America, for example, lets its customers see accounts they have with other banks. Last year, Charlotte-based regional lender Park Sterling Bank launched a similar service called 360.
Mark Schwanhausser, digital banking analyst for California-based adviser Javelin, said startups’ offerings sometimes provide a better user experience.
“They’re innovative. They’re colorful,” he said. “This is about competition.”
A Bank of America spokesperson said the bank does not restrict access to aggregators as a matter of policy. The bank also does not block data out of concerns about competition from aggregators, the spokesperson said.
3. You must turn over bank-account passwords. In order for aggregator sites to sync up with your bank accounts, they have to have your user name and passwords.
“There is an inherent risk any time you share your sensitive data with any entity, even the ones that have the best practices in place and the strongest encryption methods,” says Eva Velasquez, president of the San Diego-based Identity Theft Resource Center.
Aggregators say they focus on security, and experts note there hasn’t been a big breach. Some big banks, like JPMorgan Chase, can’t say the same.
4. Who’s liable if there’s fraud against a consumer? Experts I spoke with said they were not sure.
“Is it the bank, is it the (aggregator’s) app or is it the consumer who is on the hook?” Schwanhausser said.
For its part, Mint’s website says parent company Intuit would be liable for no more than $500 for losses involving the use of its services.
5. Sites might have old data. If banks continue to disrupt the flow of data to aggregator sites, it might mean the information consumers look at is old.
That’s certainly something to keep in mind if you are using these sites to manage your money.