Should You Leave A Balance In Your Venmo Account? Here’s Why You Shouldn’t
Venmo is the easiest way to pay friends and family for life’s little incidentals. The cash payment app is so popular that in 2020, over 50 million Venmo users opened the app to pay one another nearly $160 billion.
Since people use the app so frequently, there’s a good chance that most Venmo users keep a balance in the app.
But should you keep a Venmo balance?
According to this One-Minute Money Hack from CNBC, keeping a balance in Venmo isn’t the best idea.
“Despite the ease with which Venmo allows you to pay rent or split the dinner bill, you should always keep an eye on your Venmo balance and make sure it doesn’t get too high.”
CNBC breaks down three reasons why carrying a balance in your Venmo account isn’t a good idea.
The first and obvious reason is that Venmo isn’t a savings account, so the money is just sitting around. For example, if someone paid you $150 for a grill formerly taking up space in your garage, and you leave the money in your Venmo account because you really don’t need it at the money, transferring the cash to a savings account will earn interest. Leave the money in savings long enough, and it will feel as though you made even more money off the grill sale.
The second reason why “no” is the best answer to “should you leave a balance in Venmo?” is because the Federal Deposit Insurance Corp doesn’t insure a Venmo balance. So let’s say Venmo goes out of business for some crazy reason or the app crashes, and all money balances are lost, or just by some bad luck glitch, there’s no record of a balance in your Venmo account. Well, you’re out of luck if Venmo says there’s nothing they can do about the missing money.
Finally, Venmo transfers take time, and sometimes time isn’t on your side. CNBC explains…
“Because Venmo reviews all of its transfers, you could be left unable to pay a bill because your funds are stuck in limbo.
Venmo says transfers typically arrive to user bank accounts within one to three days but warns that reviews may cause delays. If rent is due and you don’t have access to your funds, that could be a big problem.”
If you still think you should leave a balance in Venmo and have your own specific reasons, the choice is always up to you. The smarter move is to take the money out ASAP and leave the Venmo balance on $0 until you need to pay off debts.