Most of us know that when we want to secure our personal details or browsing activity either on our home connection or in public that using a VPN is one of the best ways to achieve this. After all in the days of pesky hackers and government snooping there is more reason than ever to want to secure yourself online or while travelling. We mostly understand that when using a VPN service more times than not we are incorporating some form of encryption and while that can vary depending on the protocol you use and also the level of encryption on that protocol it is a far superior situation than not using any form of security.
One question that gets asked a lot both at our site and in general is how this affects logging in to more privacy sensitive websites. We should all feel safer logging in to a forum or other site when using a VPN but what about when logging in to our banks, email, social media, steam etc. As soon as it comes to logging in to a financial institution like our bank we start to question if it is actually safe to do so.
You are entrusting your connection to a third party, while this is not a huge issue when logging in to something simple, when you access your bank or similar site you may start to question who you're handing over your details to and although we inherently trust and should do with any good provider it is not so clear cut when your hard earned cash or personal details may be at stake.
Understanding the basics workings of a VPN service and web services as a whole answers this age old question. Firstly when making connection to a VPN service your actions and data are encrypted between yourself and the VPN service. This is true when accessing either a secure or insecure site. So if you visit a news website, this is encrypted, if you access your bank this is also encrypted. While it is entirely possible (although unlikely) that the VPN service could see the data accessed on the news website given in the example they could NOT see the data when you accessed your bank.
When you visit a news website such as http://www.bbc.com/news/ you access it in a plain text way, this means nothing is encrypted which is signified with the “http” protocol. This is not a problem for this kind of website because you are not submitting or transmitting any secure information. Your bank, social media sites or other secure sites make use of a protocol called “https” which is signified in the address when you visit for example https://www.bankofamerica.com/ or https://www.paypal.com – What this means is the data is encrypted on your computer before being sent to the site and unencrypted their end. So regardless of if you're using your home connection, public wi-fi or even accessing via your VPN service the data is still encrypted regardless.
The simplest way to understand this in layman's terms is the VPN connection has encrypted your WHOLE connection while HTTPS has further encrypted the data for that specific task even inside the encryption of the VPN connection. It is a separate encryption in itself inside an encrypted connection.
So in essence it is totally safe to access more secure type websites while connected to a VPN server. One consideration for your bank or Paypal may be that they could flag the difference of location or IP accessing your account and move to temporarily block it.
Although this is not definitely the case you would hope a financial institution that sees you logging in from the United Kingdom daily only to have a login from Russia the day after would trigger some sort of red flag. A small consideration but definitely nothing to be worried about in terms of the security of passwords.
The only time a VPN provider could possibly (although unlikely they would want to) see any kind of password is when you log in to a site that does not use HTTPS. These are likely to be unimportant low level type sites. For any secure site you should always look out for HTTPS or the padlock symbol on your browser.
So to answer the question, in general when using secure websites, no, a VPN provider can not see your passwords and it is entirely safe to access them via your VPN connection.