WHY YOU SHOULDN'T KEEP A BALANCE IN YOUR.png

Cash apps like PayPal and Venmo are very convenient. You can pay your babysitter, send cash to a friend, or payback someone with just a few swipes of your finger.

But they’re not a substitute for a bank. And keeping chunks of cash lying around is never a good idea.

So why don’t I recommend leaving a balance in places like PayPal and Venmo. Well it’s for a number of reasons.

Your money isn’t insured.

Money in your bank is FDIC insured (or the NCUA if you use a credit union). In the event that your bank failed, your money would be insured up to $250,000.

But if your cash app suddenly went under you would lose that money.

Your account can be canceled

PayPal can freeze your account on a whim. They can claim fraudulent activity and freeze or close your account and you never see your money again.

You’re not gaining interest

Someone is laughing at that sentence. Sure, most banks offer little to no interest anymore, but high yield savings accounts from places like Ally and Capital 360 are still a good option.

Your money sitting in your Venmo isn’t gaining you interest. If that money was in a high yield savings account you would be earning something.

So the next time you get paid via one of these apps, make a plan to transfer the money sooner rather than later.

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