Protect Your Funds: Move Money from Digital Payment Apps to Ensure Government Insurance Coverage

The Consumer Financial Protection Bureau (CFPB) is urging consumers to take immediate action to safeguard their funds. According to the federal watchdog, money held on popular mobile payment apps like Venmo, Cash App, or PayPal may be at risk if these companies fail, as they are not automatically insured by the government.

Director of the CFPB, Rohit Chopra, highlights that while digital payment apps are increasingly used as substitutes for traditional bank accounts, they lack the same level of protection to ensure the safety of funds. In the event of a failure of a digital payment company, such as Cash App or Venmo, consumers could face the possibility of losing their money or getting caught up in a lengthy bankruptcy process.

To mitigate this risk, the CFPB strongly advises consumers to transfer their funds from digital payment apps to traditional banks and credit union accounts, which provide federal deposit insurance guarantees. This move ensures that in case of a bank failure, depositors can have confidence that their money is safe and protected.

The CFPB cites the recent failures of Silicon Valley Bank, Signature Bank, and First Republic Bank as examples. Although insured depositors in these banks had the reassurance of government-backed coverage, the majority of Silicon Valley Bank’s deposits were not insured due to exceeding the $250,000 limit on federal deposit insurance coverage. It’s worth noting that the government intervened to cover these depositors.

By moving funds to insured accounts, consumers can secure their financial stability and avoid potential losses. Take action now to protect your hard-earned money by transferring it from nonbank payment apps to accounts with government-backed insurance coverage.