The Risk of Storing Money in Payment Apps
Payment apps like Paypal, Venmo, Cash App, and Apple Pay are used by many to spend, manage, and send money. While convenient, it is important to know that these payment apps are not federally insured and stored funds have the potential to be lost.
The CFPB (Consumer Financial Protection Bureau) recently warned consumers about the risk of storing money in these apps. The agency noted that to earn income, these companies invest deposited funds, like how banks invest customer deposits, however, those stored funds would be at risk if these investments lost value.
Users of payment apps can spend and send money through connected checking and savings accounts at federally insured financial institutions, like Freedom Credit Union, without storing funds in the apps. It is recommended to transfer stored funds to these federally insured institution accounts rather than storing the funds in the apps. In addition to being more secure, if you are keeping funds in your credit union accounts you will also benefit from dividends paid in the accounts.
When a member joins the Credit Union, they can be confident in knowing that their funds are federally insured by NCUA, up to $250,000. For more information about NCUA insurance visit https://ncua.gov/files/publications/guides-manuals/NCUAHowYourAcctInsured.pdf.