Practical advice to brighten up your financial future.
Many of us treat the money in our Venmo, Cash App, and PayPal accounts like a $ 20 bill you find in a jacket you haven’t worn since last winter. And while it’s nice to put small amounts of money across multiple accounts only to be surprised to find it later, the smart move is to keep a minimum of money in Venmo and similar accounts. Unlike Lady Gaga, I just have three reasons:
- Most of the money deposited into a Venmo account is not FDIC insured, so if the business goes bankrupt, there is no promise made by the government that your money will be returned to you. It’s unlikely that an app like Venmo or Cash App will pull a Houdini with your money, sure, but do you even potentially want to be a part of this trick? (To note: Direct deposits and cryptocurrency are eligible for FDIC pass-through insurance, in Venmo’s terms.)
- Having your money in small piles all over the internet makes it harder to track. Get in the habit of transferring your roommate’s utility payment to your bank account, so it’s easier to know how much money you have in total.
- Resist the urge to treat your Venmo balance like that $ 20 bill you found in your jacket and are free to use for small transactions you wouldn’t deign to put on your Amex Platinum card. Moving your money to a regular ole account adds a barrier to breaking your financial goals.
I wish I could say something about how traditional bank accounts carry decent interest rates, and you miss out on a ton of money if you leave your money in a Venmo or Cash App account, but since the best high yield FDIC insured savings account interest rates are always less than 1%, there is no argument to be made about that. … So, I hope my three reasons are enough to keep your friends’ brunch debts out of your Venmo account.
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