Fast, Safe, Social — Are We Sure About That?
In today's fast-paced digital world, money apps like Venmo and Cash App have gained popularity as convenient tools for managing financial transactions. They offer seamless peer-to-peer transfers and provide a simple way to split bills, pay friends, or make online purchases. However, it's essential to recognize the potential risks associated with keeping money in these money apps. In this blog, we will explore why relying on money apps for storing funds might not be the wisest choice and why considering alternatives is a prudent financial decision.
In early June of 2023, the Consumer Financial Bureau warned that customers of PayPal, Venmo, and CashApp, are "at risk of losing their money in a crisis because the funds are not protected by federal deposit insurance," (CBS News). In short, if the payment of these apps suddenly crashes, your money is gone. According to the Pew Research Center in a study they conducted last year in 2022, 57% of American adults have utilized PayPal, 38% Venmo, and about 26% have utilized CashApp. So in total, roughly 76% of Americans say "they have used at least one of these three payment sites or apps," (Pew Research Center).
To safeguard funds stored in payment apps, experts recommend taking proactive measures. Consumer Reports suggests promptly removing transferred funds from the app into a traditional bank account. By doing so, you eliminate the risk of your money disappearing if the app were to fail. Setting up automatic reminders, such as email or text notifications, can also help ensure timely transfers. It is crucial to avoid leaving substantial amounts of money idle within the app, as this increases the potential danger.
While money apps offer convenience and simplicity, it's vital to be aware of the risks associated with relying solely on these platforms for storing funds. The lack of federal deposit insurance and the possibility of app failures pose significant threats to the security of your money. By considering alternative options, such as promptly transferring funds to traditional bank accounts, setting up reminders for regular transfers, and being mindful of leaving substantial amounts of money within the app, you can better protect your hard-earned funds. It is essential to strike a balance between convenience and security, ensuring the safety of your finances in an ever-evolving digital landscape.
Take a minute to review the deposit opportunities at Roanoke Valley Community Credit Union for both checking and savings accounts. Contact us with any questions.
Sources:
https://www.cbsnews.com/news/paypal-cash-app-venmo-payment-apps-deposit-insurance-cfpb/
https://www.pewresearch.org/short-reads/2022/09/08/payment-apps-like-venmo-and-cash-app-bring-convenience-and-security-concerns-to-some-users/
https://www.nytimes.com/2023/06/09/your-money/venmo-cash-app-paypal-payment-