The safest way to bank online is with some sort of personal digital security device to prove it is really you making the charge.  In fact, the FFIEC, a government watchdog group for banking, recommends two-factor authentication for online banking.

This could be a smart bankcard you put into a small USB reader when you pay online.  Or it could be a token, a small gadget that generates a different password you must enter on the keyboard for every online banking session.  Having a second factor like this, some ""thing"" in addition to the password, makes online banking much more secure.  It is like when you make an ATM withdrawal, because you need both an ATM card and a PIN code.  Bankers call this “two-factor” authentication.  One factor is something you know, the PIN, and the second factor is something you have, the card or token.  Even if someone steals your password, say by phishing or a keyboard logger spyware program, they cannot access your account because they do not have this device.

U.S. banks might consider offering smart cards like those used in Canada, Latin America, Europe and Japan, here. The banks presently issue them abroad.  Leading U.K. bank Barclays used smart bankcards to stop online fraud.  And Randy Vanderhoof, executive director of the Smart Card Alliance is recommending smart bankcards for the United States as a way to stop online fraud and identity theft.

Another up and coming way that banks provide two-factor authentication is by using text messages (Secure Message Service, SMS) sent to your mobile phone.  You insert your user name and password on the bank’s Web site (this is the “something you know”), it then sends you a one-time password via text message to your mobile phone (this is the “something you have”), which you then input into the Web site for access to your account.  There are various means by which a bank can implement two-factor authentication, so check with your bank.