What security measures should I look for when I sign up for online banking?

FIGHTING FRAUD

Banks are coming up with new tools to fight fraud. Should you use them? Here's what's out there or under consideration:

Software

Banks can use software to note if you are logging on from a different computer than usual or from a different part of the world. If so, you might have to jump through extra hoops to prove your identity before logging on.

Pros: Inexpensive, doesn't require you to change habits much

Cons: Traveling customers could confuse the system, may not be as secure as other solutions

Tokens

Just like an ATM card or a driver's license, a token is essentially the key you carry around to prove your identity. The token can be a key fob displaying a temporary password, something that plugs into a computer or even a cellular phone.

Pros: A token can't be stolen over the Internet. A thief needs physical access to you to get it. Plus, you can move it from computer to computer.

Cons: Expensive, and if every financial institution issues a separate token, inconvenient for you to carry them all around

Smart cards

Taking the token idea a step further, a smart card could be set up to access all your bank accounts and even store other data, such as health records. You could insert the card into a reader attached to your computer.

Pros: Could offer convenience beyond banking, handier than carrying tokens for each account

Cons: Expensive, possible privacy concerns

Biometrics

Uses a physical characteristic, such as your fingerprint, the iris of your eye or your typing rhythm to identify you

Pros: Less chance of theft, no need to carry anything extra

Cons: Affordable technology hasn't been developed that can reliably check these attributes at home.

Source: Chronicle research, TowerGroup, Forrester Research
Protecting yourself

Online banking safety measures:

-- Pick a password that's hard to guess, then change it regularly. Combine letters, numbers or other characters instead of just using a word in the dictionary. Never use something like your birth date, which someone could figure out. And don't use the same password for all your accounts.

-- Be suspicious of any e-mail that asks for your user name and password. The biggest trend in online fraud right now -- phishing -- involves criminals sending out e-mails pretending to be from banks, asking customers to log in with user names and passwords.

-- Use basic computer security programs like antivirus software, anti- spyware software and firewalls. If you don't, you're at risk of hackers sneaking a Trojan horse program onto your computer that could record your passwords. Also, install the latest updates to your operating system.

-- Use a newer browser. If you've been using the same Internet browser since before 2000, you need to upgrade it before you bank online. Browsers such as Netscape Navigator 7.0 or higher, Microsoft's Internet Explorer 6.0 or higher, or AOL 8.0 or higher support the strong, 128-bit encryption technology now standard in online banking.

-- Review your statements carefully on a regular basis to look for unauthorized transactions.

Sources: Chronicle research