How Can You Tell If a Finance App Is Safe? Green Flags and Red Flags to Look Out For

Key Takeaways

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• A secure budgeting app protects your data with encryption and multi-factor authentication, limits bank access to read-only, and backs up its security claims with independent audits.
• Look for clear explanations of how the app connects to your bank and whether it uses tokenized access instead of storing your bank login.
• Check the privacy and deletion policies before linking your account. You should know who can access your data, whether it’s sold, and how to delete it when you leave.
• Vague “bank-level security” claims, no MFA, and stored bank credentials are red flags worth investigating before you connect.

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Linking your bank account to a finance app like Commons can make managing money a lot easier. It sorts your transactions, and your whole financial picture lives in one place. A few quick checks can tell you whether an app has earned that access.

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7 Green Flags to Look for in a Finance App

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Trustworthy finance apps make their security easy to find. Here are 7 green flags that show an app takes protecting your bank account seriously:

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1. It Uses AES-256 Encryption

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Encryption scrambles your data so only authorized systems can read it. AES-256 is the gold standard: U.S. government agencies use it to protect classified information, and many banks use it too. Look for "AES-256" or "256-bit encryption" on the app's security page. Bonus points if the app encrypts your data both in transit (often listed as TLS) and at rest on its servers.

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2. It Offers Multi-Factor Authentication (MFA)

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MFA requires a second proof of identity beyond your password, like a text code, an authenticator app, or a fingerprint. Even if someone gets your password, they can't get into your account without that second step. Many trusted budgeting apps also support biometrics like Face ID and Touch ID. Look for apps that turn MFA on by default or prompt you to set it up when you sign up.

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3. It's SOC 2 Type II Compliant

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SOC 2 is a security framework from the American Institute of Certified Public Accountants (AICPA). A Type II report means an independent auditor tested the company's security controls over several months, not just on a single day. It's one of the clearest signs that a company backs up its security claims with outside proof. Check the app's security or trust page for a SOC 2 badge. Many companies will share the full report on request.

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4. It Only Needs Read-Only Access

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A budgeting app needs to see your balances and transactions. It doesn't need to move your money. Read-only access lets the app pull in your data without the ability to make transfers or payments. If an app's main job is tracking and budgeting, read-only access is all it should ask for. Apps that do move money, like peer-to-peer payment apps, need more access, and you can hold them to an even higher standard.

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5. It's Transparent About Its Aggregator Partners

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Many finance apps connect to your bank through a data aggregator like Plaid, Yodlee, or Finicity. When you use an app powered by Plaid, you sign in to your bank through Plaid, which then encrypts your data and shares it with the app without disclosing your username or password. These services use tokenized access: the app gets a secure digital key instead of your actual login. A trustworthy app names its aggregator partners and explains how the connection works.

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6. It Has a Clear Data Deletion Policy

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You should be able to leave an app and take your data out with you. A clear deletion policy tells you how to delete your account, how long the company keeps your data afterward, and whether it disconnects your linked bank accounts. Look for strict data retention policies and an easy-to-find "delete my account" option in the app's settings.

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7. It Promises Not to Sell Your Data

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Some apps make money by selling user data to advertisers. Trustworthy apps earn money through subscriptions or other transparent business models, and they state plainly that they don't sell your personal information. Read the privacy policy for a line like "we do not sell your personal data." Pay attention to the fine print around "sharing with partners" or "affiliates," too.

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5 Red Flags That Mean You Should Keep Looking

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Even polished apps can cut corners on security. Here are 5 red flags that signal it's time to look for another option:

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1. A Vague Privacy Policy

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A privacy policy should explain what data the app collects, how it stores that data, and who it shares it with. Vague language or legalese without meaningful detail is a warning sign. The same goes for apps that don't publish a privacy policy at all, or whose policies allow them to sell your data to marketers or undisclosed third parties.

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2. It Asks for (and Stores) Your Bank Login

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Secure apps connect through verified services with tokenized access. Apps that ask you to type your bank username and password directly into the app, and then store them, put your credentials in one more place where they can leak. Even if an app claims it uses your login "just once," you can't verify how it handles that information behind the scenes. Some banks' user agreements also discourage sharing your login with third parties, which is worth checking.

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3. It Relies on Screen Scraping

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Screen scraping is an older way to pull financial data. The app logs in to your bank account as you, using your stored credentials, and copies the information it finds. It works, but it gives the app far more access than it needs and depends on keeping your password on file. Many banks and aggregators now offer secure API connections that share only the data an app needs. If an app asks for your bank password to "sync" or "refresh" your accounts, ask how it connects.

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4. No Multi-Factor Authentication

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An app without MFA protects your data with only a password. Anyone who gets your login can access your account and see a detailed view of your finances. Choose apps that encourage or require MFA, especially ones tied to your bank accounts.

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5. No Mention of Third-Party Security Audits

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Legitimate apps proudly display their security certifications, like SOC 2 compliance. If an app's website promises "bank-level security" without explaining what that means, or never mentions an independent audit, you have no outside proof that its security works as promised. A quick search of the app's name with terms like "breach" or "FTC complaint" can also tell you a lot.

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