This article is for educational purposes only and does not constitute medical, legal, or financial advice. Every family situation is different, and you should consult with appropriate professionals about your specific circumstances.

Financial Institution Safeguards — Tools Banks Offer to Protect Seniors

Your parent's bank has tools available to protect your parent from financial fraud and abuse. Many of these tools exist, and many of your parent's financial institutions offer them. The challenge is that your parent has to ask for them or someone has to help your parent set them up. They're not automatic. Most people don't know these tools exist, which means most people aren't using them.

Understanding what your parent's financial institutions can offer, how these protections work, and which ones make sense for your parent's situation means your parent can use the tools available rather than suffering fraud that could have been prevented.

Understanding the Basics

Banks and financial institutions offer several types of protections. Some are designed to protect against external fraud. Some are designed to give your parent control over their own account and to alert them to suspicious activity. Some are designed to prevent or slow down financial exploitation.

Transaction limits and spending controls restrict how much money can be withdrawn or transferred in a given period. Your parent sets a limit—say $500 per day for withdrawals or $1,000 per day for transfers. If someone tries to withdraw or transfer more than the limit, the transaction is blocked or flagged for verification. This doesn't prevent all fraud, but it limits the damage. If a scammer gets your parent's account information, they can't drain the account in one transaction.

Daily withdrawal limits work the same way. ATM machines often have daily limits already (often $500), but you can lower that limit further. If your parent doesn't need to withdraw $500 daily, lowering the limit means even if someone has the ATM card, they can't withdraw much money per day.

Account alerts notify your parent when transactions occur above a certain threshold. Your parent can set up alerts for transfers over $100, or $500, or $1,000. Every time a transaction above that amount happens, your parent gets an email or text alert. This gives your parent a chance to dispute unauthorized transactions quickly.

Two-factor authentication requires two pieces of information to log into an account or make large transactions. Your parent knows the password, but they also have to have access to their phone to confirm the login with a code. This prevents scammers from accessing the account even if they have the password.

Restricted access accounts limit who can access the account and what they can do. Your parent can set up an account that only allows certain types of transactions, or that requires a second person to approve large transactions.

Freeze or lock features temporarily lock an account so no withdrawals or transfers can be made. Your parent might lock their account when traveling or when they're aware of fraud attempts.

Tracking Your Parent's Money

Talk to your parent's bank about what protections they offer. Policies vary by bank. Some larger banks offer comprehensive protections. Some smaller banks or credit unions offer fewer options. Your parent's bank can explain what's available.

Ask your parent whether they want to set up any protections. Daily spending limits might be important if your parent is at risk of financial abuse. Account alerts might be important for your parent to be aware of activity. Two-factor authentication is important for all accounts, especially accounts that hold significant money.

Set up transaction alerts for your parent if your parent will use them. Alerts are only useful if your parent actually looks at them. Someone needs to review alerts and follow up on suspicious activity. If your parent is unlikely to check emails or texts, alerts might not be effective.

If your parent has granted power of attorney to someone, consider setting up additional safeguards. Requiring a second person to approve large transactions prevents a single person with power of attorney from making unauthorized large transfers.

If your parent is vulnerable to scams or has been scammed before, consider lower daily spending limits. Better to have your parent need to call the bank to make a large authorized transfer than to have a scammer able to drain the account.

Managing Day-to-Day Finances

If you're helping your parent manage finances, use these protections yourself. Set up alerts on accounts you manage. Set reasonable daily spending limits. Require two-factor authentication on all accounts.

For your parent's checking account, consider setting up the account so that most of the money isn't in the checking account. Your parent has an account for day-to-day expenses and bill paying. Money for savings or investments is in a separate account that's harder to access. This way, even if the checking account is compromised, most of your parent's money is protected.

If your parent has online access to accounts, make sure your parent is using strong passwords and two-factor authentication. Change passwords regularly if your parent is willing to do so.

If someone has access to your parent's accounts (a power of attorney, a caregiver, a family member), set up accounts with restrictions. Maybe the person can access the account and see balances, but transfers require your parent's approval. Maybe they can pay bills but not make large transfers.

If a caregiver has access to your parent's accounts for legitimate reasons (paying bills, accessing funds for your parent's care), set specific spending limits for that caregiver. Document what the caregiver is authorized to spend. Review activity regularly to make sure the caregiver is staying within authorization.

Planning for the Long-Term

If your parent might become unable to manage finances due to cognitive decline or other issues, set up these protections now while your parent can authorize them. Future-you will be grateful that present-you took these steps.

Set up a trusted contact at your parent's bank. Most banks allow you to identify a trusted contact who the bank can talk to if there are fraud concerns. This person doesn't need to be authorized to make transactions, but the bank can share information with them in fraud situations.

Identify which accounts are essential for your parent's day-to-day life and which are less critical. The savings account that your parent doesn't touch regularly can have stronger restrictions than the checking account that's used for bills. Think about what access your parent actually needs.

Understand what happens if your parent becomes incapacitated. Can a power of attorney automatically take over accounts, or do accounts need to be updated? Can the power of attorney add themselves to accounts, or do accounts need new authorization? These are questions for your parent's bank, and understanding the answers helps you plan.

Talk to your parent about preferences. Would your parent want you to have access to accounts if your parent becomes unable to manage them? Would your parent want multiple family members involved in account access? Does your parent want certain accounts kept completely private even from family? Your parent's preferences should guide the protections you set up.

Financial institutions have tools available to protect your parent. These tools are only effective if your parent uses them. They require setup, they require understanding, and they require ongoing monitoring. But they exist specifically to help elderly people protect themselves from fraud and exploitation. Your parent's bank can explain what's available and help set up what makes sense.

How To Help Your Elders is an educational resource. We do not provide medical, legal, or financial advice. The information in this article is general in nature and may not apply to your specific situation. If you are concerned about a loved one's cognitive health or safety, consult with their healthcare provider or contact your local Area Agency on Aging for guidance and support.