Don’t Keep a Balance in Your Venmo Account

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The days of digging up cash when you owe money to a friend or family member are long gone. But the way you use your favorite peer-to-peer payment app might not be the best move for your finances.

About four in five Americans use mobile payment apps, according to a new survey from NerdWallet. And two-thirds of payment app users said they have kept a balance in their payment apps. Just how much may surprise you: 46% said they keep more than $100 in their account. And the average for how high users will let their balance get before withdrawing it? $287.

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$287! Do you know what you can do with $287? You can make your monthly student loan payment. $287 is a car payment. It’s 22 trips to the movies (11 if you’re taking a date).

That money doesn’t stay there forever—half of respondents said they cash out at least once per month, and only 6% said they never cash out.

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If we were talking about a bank account, no big deal. But we’re not.

NerdWallet points out that bank accounts are FDIC insured, which means that if you’re a victim of fraud or your bank fails, the government covers up to $250,000 in your account.

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You don’t get that with a mobile payment app.

Sure, Venmo and its parent company PayPal have been around for long enough that it’s unlikely they’ll suddenly shut down tomorrow. Cash App is run by Square, which has been around for 10 years. Zelle is owned by a couple of banks, but it still has a service agreement that washes its hands of any responsibility over your money and what happens to it when you use the app. Mobile payment apps are technology companies, not financial institutions that have an interest in protecting your money.

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On top of the lack of responsibility these apps have for your money, you’re also doing yourself a disservice by keeping your cash here. In exchange for convenience, you run the risk of screwing up your budget.

And if you don’t need that money for this month’s expenses, you’re missing your chance to earn interest on it. APYs for high-yield savings accounts aren’t exactly exciting right now, but earning even 1% on your $287 would be better than letting it languish in in an unprotected payment app.

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Sure, logging into your payment app can provide a rush when you “find” money. But having that money in a real bank account can help you better predict your cash flow and plan ahead.

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It’s nice to discover “fun money” in your Venmo account, but you could put that money in savings, use it to pay debt, or just have it floating in your bank account for when you need it most.

Darknet  Lifehacker

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