Can You Protect Your Data While Still Banking Safely?

This is Part 3 of a 3 part series on financial privacy. You can read Part 1 here and Part 2 here.

Two weeks ago I outlined the main risks with banks in regard to privacy and financial censorship.

Last week I explained why I think cash and crypto are even worse alternatives, but I also ended that post by reaffirming that banks are not your friend and that the risks are still real.

This week - in my final part on this series - I'm going to discuss how you can reduce the risks associated with banks while enjoying their benefits.

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Financial Disclaimer: The information and content provided here is for general informational and educational purposes only. It does not constitute personalized financial, investment, tax, accounting, legal, or other professional advice, and it should not be relied upon as a substitute for advice from a qualified professional.

Picking a Bank

Let's start from the top.

A common question I get on this topic is how to pick a bank. Most people are looking for banks with solid customer-facing 2FA or not-abysmal privacy policies.

As I explained in Part 1, most banks actually have pretty solid security measures. Also, all of them are beholden to Know-Your-Customer (KYC) regulation so they're all going to demand a lot of personal data when opening a new account with them.

Therefore, it's my opinion that you should pick the bank that best fits your financial and lifestyle goals and needs.

For example, if you travel often, you may want a bank with a lot of branches all over (or at least where you travel often). If you're looking to retire early, you might be more interested in institutions that offer high interest rates and low-cost investment accounts.

If you make a list of banks who meet your needs best and still can't decide which one is right for you, THEN I would be willing to consider additional factors like privacy and security.

Some banks support passkeys (consult passkeys.directory or PasskeyIndex for known institutions), and 2FA Directory lists which banks support which type of 2FA methods (if any).

2FA Directory

List of sites with two factor auth support which includes SMS, email, phone calls, hardware, and software.

Other banks also support certain limited privacy features, too. Michael Bazzell has talked in previous editions of Extreme Privacy about banks that will let you put a preferred name on your debit card, and some banks (like Capital One) are known for allowing virtual card purchases.

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Of course, these don't protect your privacy from the bank itself, but they're still great features that you can use to your advantage in certain other situations.

Data Breach Defense

The first of our concerns comes most prominently when you open a bank account.

While KYC laws require you to verify your identity with real information like full name, date of birth, and Social Security number, there's still a number of ways to protect yourself.

To start, I firmly believe that every American should freeze their credit and add a fraud alert to their account every year. You should also freeze the credit of your children or any minors in your care.

When it comes to aliasing information, you can sign up with an alias email address - ideally with a custom domain for maximum control - and a dedicated Voice-over-IP (VoIP) number, which is significantly harder to SIM-swap than a traditional SIM phone number. Some institutions will accept a private mailbox for the address. Check with the bank for more information.

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When asking about PO Boxes, I've had a lot of success by claiming to be a "digital nomad" or claiming to move around a lot and asking what the options are. That raises the fewest amount of questions or suspicion.

Not all data breaches come in the form of the bank getting hacked though. Some can be as simple as having your individual account hacked.

That's why it's critical to use a password manager to create strong, unique passwords and store them safely, and to add two-factor authentication (2FA) if your bank offers it.

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Be sure to be proactive in asking your bank what 2FA options they offer. Some will offer advanced options - such as a token - but not advertise it so you have to take the initiative to inquire.

Financial Privacy

As I also cited in Part 1, it's not just your KYC data that banks sell to brokers. They also sell spending habits: how much you spend, where, how much you make, and probably more.

Thankfully, this is one of the easiest ways to protect your financial privacy, though it will require some effort and sacrificing a little convenience.

Cash

The easiest way to regain financial privacy in your day-to-day life is to use cash for transactions.

In theory cash could be tracked because it does have serial numbers, but as far as we know it's not - or at least not nearly to the same degree as swiping a card. It might get tracked when it gets deposited at the bank, but it almost certainly doesn't get tracked when it goes in the cash register at the grocery store or when you tip the server at a restaurant.

There's also a ton of peripheral benefits of cash:

It makes it harder to go over budget (when you're out of cash, you're out)
It's been proven to cause people to spend less
Easier budgeting (see the Cash Envelope System)
No risk of debt/interest payments/overdraft
Cash works even during a power or internet outage or places with bad cell service

Digital Payments

Of course, we are living in an increasingly cashless and eCommerce-based society, so it's not always feasible to use cash.

In this case, there's a number of options available for online cards.

Privacy.com is probably the most flexible, currently-vetted option because they also offer cards that work with Apple & Google Pay, meaning you can also use them for in-person shopping at stores that don't accept cash.

There's also MySudo, or the up-and-coming Halocard.

Prepaid gift cards are also an often-forgotten option. You can use them for specific subscriptions and purchases like Amazon, Netflix, or Sephora or you can get general-use Visa or Mastercard gift cards that can be used pretty much anywhere until the balance runs out.

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Be careful with gift cards because sometimes they can raise fraud flags from the company (especially with new accounts or other "suspicious" activity like using a VPN) and get locked, causing you to lose however much money was loaded onto it. Also sometimes Visa & Mastercard gift cards require some degree of verification or KYC for online shopping. Your mileage may vary.

For more options and information, you can consult my website:

Cryptocurrency

There's also been a rise in vendors who accept cryptocurrency payments.

Bitcoin is by far the most popular, though Monero is considered the closest thing possible to "digital cash" in terms of transaction anonymity. ZCash is also a good choice, though it's less widely adopted and the privacy protections are not enabled by default.

You can type "stores that accept cryptocurrency" into any search engine to get multiple lists, but this one from Bitpay names over 250 companies like Delta Airlines, Newegg.com, Ralph Lauren, IKEA, Hotels.com, Nintendo, and countless others.

Many privacy-focused services also accept cryptocurrency payments either directly or via sites like Proxystore.

There's also services like Coincards and Cake Pay to buy gift cards using cryptocurrency for companies that don't accept cryptocurrency directly (or don't accept your choice of cryptocurrency).

I recommend checking out Privacy Guides for more information about cryptocurrency, recommended wallets, and more.

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Financial Censorship

Using all the tools I've shared above, most people should be able to get a pretty significant amount of financial privacy and security while avoiding the risks of physical assets or cryptocurrency's volatility.

However, this hasn't address financial censorship.

This is a very unlikely scenario for most readers, and unfortunately preparing against it typically requires you to have a lot of money to diversify. Many of these strategies are either unavailable or unrealistic for most of us, so I won't go into detail.

However, some are extremely reasonable (and wise), so I'll list the general strategies and you can do more research into the ones you think might be right for you:

Account diversification: keep multiple bank accounts with multiple banks - including both bigger banks and smaller local banks and credit unions. They use different criteria to make decisions.
Payment Processor Diversification: Visa, Mastercard, and American Express are a few of the top card networks, but they're each an independent network. American Express may not deplatform you while Visa might. Try to diversify your cards if you can.
Currency & Jurisdiction Diversification: try to diversify the types of currency you hold - not just cryptocurrency but Euros (for example). Also consider foreign bank accounts - not to dodge taxes but a foreign bank is less likely to close your account with a US order. (Not unlikely, but less likely.)
Keep Good Documentation: keep records of all your bank accounts and their terms of service. If you get any warnings or account closures, keep the messages along with dates and stated reasons. You can then turn all this over to a lawyer to check for options.
Know the Law: never do anything illegal, and keep up with what laws exist in your area to protect against financial discrimination and what your options are if you experience it.

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It's worth noting there's a distinct difference between "your bank's algorithm messed up" and "the government is persecuting you." An emergency AmEx card probably won't protect your from government censorship, but a savings account stored with a local credit union separate from your main bank will keep your bills paid in the event of an accidental, wrongful account closure while you get it sorted out. If your threat model includes government censorship, please be sure to do additional research and talk to qualified experts.

Balancing Contradictions

Some readers may be a little confused by my seeming contradictions.

For example, I said not to store your wealth in cash or crypto but to spend in cash wherever possible and cryptocurrency in certain situations.

They key nuance here is that I advise against storing the majority of your wealth in these formats.

There's a distinct difference between sitting down each paycheck, doing a budget, and taking out the amount you need for groceries at the ATM vs keeping your entire paycheck in cash at all times.

The easiest way to balance this is - as I said - with a budget: when you know how much you're going to spend each paycheck in person, you can go to the bank and withdraw the amount of cash you need. This way you're only keeping as much cash as you need for any given week or pay period.

Regarding cryptocurrency, personal finance experts typically recommend no more than 5% of your net worth should be in cryptocurrency. Much like cash, you could also choose to convert fiat to crypto as-needed for spending directly with services who accept it.

Conclusion

As with everything in privacy, threat models always take priority. The goal of this series was not to offer a step-by-step "how to" guide, but to present a framework for ways to reduce risk while also maximizing privacy.

In most areas of life, there is no perfect solution, and finance is one area where this is especially true. There is no perfect solution in finance that is perfectly anonymous, censorship-proof, and risk-free while also being widely accepted and convenient.

While not every single argument I presented here will be right for everyone, hopefully this post at least got you thinking about the topic and gave you some ideas about how to balance each of these in a way where you can get the maximum benefit from each, preferably without going to extremes.

Hopefully now you can take this information and start to plan ahead about the best way to protect your own financial privacy with strategies that work best for you.

Tech changes fast, so be sure to check out our website for all the latest recommendations, tools, services, and more.

The New Oil