Are you storing funds on your cash payment apps? Your money may not be as safe there as you may think it is.
More than three-quarters of adults in the U.S. have used some sort of digital payment app for a transaction. While they are a convenient way to send, store, and receive money, the Consumer Financial Protection Bureau is warning against storing your cash on those apps.
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The agency says these apps are increasingly being used as substitutes for traditional banks and credit unions. However, payment apps are not like banks.
Your money is not protected by federal deposit insurance coverage. The FDIC insures bank accounts up to $250,000.
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The CFPB has issued a consumer advisory after the recent failure of several banks led to panicked customers withdrawing their funds.
Amy Zirkle is the Senior program manager for payments and deposit markets at the CFPB.
“I think what we're seeing more and more is the challenges that that these payment apps and digital and name enablement presents to the consumer,” said Zirkle. “Without question it is easy, efficient, ready access for some consumers, but at the end of the day, you want to protect your money. You want to ensure that your funds are safe and secure.”
The CFPB notes user agreements for digital payment apps often lack information on where funds are being held or invested, whether and under what conditions they may be insured and what would happen if the company or the entity holding the funds were to fail.
The best thing you can do is transfer your money to your bank account right away.
It usually takes 2 to 3 business days, or less for it to appear in your bank account.
If you don’t want to wait, most payment apps offer instant transfers for a small fee.
The CFPB has more information on its website here.
