Don’t Leave Cash in Payment Apps

If you keep money in payment apps like CashApp or Venmo, this is your alert to stop. Why?  The Consumer Financial Protection Bureau (CFPB) issued a warning in June because users are leaving balances totaling billions of dollars in the apps themselves rather than transferring those funds back to their accounts at credit unions or banks.

We get how it happens. You go out for a celebratory dinner with a group of friends, but only a few of you have cash, so you offer to put the whole tab on your credit card — you might as well snag those rewards, right? — and then over the course of the next few days (or, hopefully, immediately) your friends all transfer the money they owe you into your account… But then life goes on, and there’s a chance you may simply forget that money is even there — or you may even start to view your app as a little slush fund for a vacation, or even “mad money” since, after all, you’ve already paid the credit card bill.

The problem is the funds in payments apps are not insured, and they don’t earn interest or dividends. Storing them in payment apps also makes them more prone to fraud – especially if you send money to the wrong person by mistake.

Here are some tips to protect yourself while using payment apps:

• Obviously, don’t store your money in payments apps. Transfer those funds to your credit union or bank account as soon as they land in the app.
• Understand the rules of payment app transfers. There’s usually no fraud protection (there is zero-liability protection with both your credit and your debit cards typically). That means if you accidentally transfer your money to the wrong person (or to a scammer) you can’t cancel the transfer.
• Be absolutely positive you are sending money to the right person before you send it.
• As always, keep your login information private and use a unique password.

Payments apps serve a great purpose, and we’re not suggesting you stop using them. We’re just encouraging you to use them safely wisely.

P.S.  We offer Zelle as part of our electronic bill pay service, ePay.  It’s more secure this way!