Is your money safe to store in a payment app? The Consumer Financial Protection Bureau says to think again. Move your money to make sure it’s FDIC insured!
Americans will soon think twice about the security of money they hold on commonly used mobile payment apps-billions of dollars worth of money, that is. The Consumer Financial Protection Bureau (CFPB) recommends that any money stored in your payment apps, like Venmo, PayPal, or Cash App, be transferred to your bank.
Why is this? Well, it is not clear that these platforms are FDIC insured. If these companies go under, your money may be held for a long time during their bankruptcy process or vanish altogether. Additionally, due to more lax oversight and regulation, payment companies are able to use your funds for risky investments and aren’t transparently communicating this to customers.
Some of these payment apps have mechanisms where you can insure your money through opening special accounts or specific activities that are not obvious. Instead, users of these platforms are advised to deposit their funds into a bank or credit union for FDIC insurance up to $250,000.
According to an October 2022 Pew Research Center survey, 76 percent of U.S. adults have used PayPal, Venmo, Zelle, or Cash App at least once. However, 43% of Black Americans have little confidence that payment sites and apps protect personal information from hackers or unauthorized users.
Traditional banks, like OneUnited Bank, are FDIC insured. You can even use OneUnited Bank Money Moves to send person-to-person payments in real time. You don’t have to be on the same payment app! When you open a bank account, you immediately get the protection of deposit insurance for up to $250,000. This kind of protection allows you to sleep like a baby and worry less about the likelihood that your funds will vanish.
In light of recent, well-documented bank failures, the CFPB is impressing upon consumers that their funds are not insured with these payment companies. They urge consumers to check the service’s terms and conditions if they are unsure of their money’s safety. The best way to make sure you are protecting as much of your funds as possible is by routinely transferring funds from your payment app to a traditional bank or credit union. #BankBlack
