I've been tracking my budget the old way for a few years now by using Excel spreadsheets that have my checking account ledger and monthly expenses broken down to categories. But I have noticed more people have moved to using apps to track their budget and some of these also connect to their bank accounts, which to me seems sketchy. Isn't this a big security risk?
Some banks offer a separate login which has read-only permissions. I've seen it called an "app login" but your banks may call it something else.
See an example (I'm not endorsing this particular service): https://www.betterment.com/resources/app-specific-passwords/
When you are asked to generate a new app password, Betterment’s interface will then generate credentials for you to use to input into the third-party application, such as Mint or TurboTax. By entering this password, the application will get access to the data it needs in a read-only format, without providing full access to your Betterment account.
For banks that don't offer a feature like this, don't share passwords. Track those accounts in your spreadsheet or switch banks.
I can only speak to the software I use, but I have no reservations since:
- The connections between the software and bank are encrypted (HTTPS)
- The usernames and passwords are encrypted locally (it requires a master password to enable the sync)
In addition, my bank requires two-factor authentication to create a connection.
So in my case (again, I can't speak to all apps) this two-factor authentication gives me a peace that it's secure - meaning that no personal information (to my knowledge) is transmitted over-the-wire unencrypted.