6 Money Management Mistakes Millennials Often Make – People choose to pay family and friends with cash apps, according to a survey of 1,000 Americans conducted by SMS marketing platform SimpleTexting. Six out of ten people choose to pay with apps over cash, compared to just 8% who choose cash. Checks, as well as bank and wire transfers, were much less popular options.
Some of the most popular payment apps available today include PayPal, Venmo, and Google Play. Whatever choice you select, keep these 11 tips in mind to keep your money safe, avoid fraud, and reduce fees.
- Use a strong password.
- Set up two-factor authentication.
- Understand payment dispute policies.
- Link a credit, not a debit card.
- Minimize your account balance.
- Keep your payments private.
- Limit personal information in the app.
- Reduce your payment fees.
- Pay online retailers confidently.
- Avoid payment app scams.
- Review privacy policies.
Cash app passwords, like every other digital account, should be powerful and include a combination of letters, numbers, and symbols. Avoid easy-to-guess words, and make sure each account has its own password. It should also go without saying that you should never share your passwords.
Set Up Two-Factor Authentication
If two-factor authentication is enabled, enable it in your account settings. Until logging in or sending money, you will receive an email or text message with a code that you must enter. “It makes it difficult for perpetrators to reach your account,” says Marcell King, chief innovation officer at Payveris, a digital payments platform.
Understand Payment Dispute Policies
People should be aware that not all payment apps are created equal, and they should understand whether and how an app can benefit them if there is a problem with a payment or if a vendor fails to deliver a transaction on time.
PayPal has excellent dispute settlement procedures, according to Louis Hoch, CEO of Usio, a payment processing company. Venmo and Zelle are built to be used only by your closest friends and do not provide the same degree of protection. “If you press a button on Zelle and apply for the money, there is no way to get the money back,” Hoch says.
Link a Credit Card
Cash apps allow users to move money and make payments by linking bank accounts, credit cards, and debit cards. “If you’re going to register a card, I’d recommend registering a credit card rather than a debit card,” King says.
Your bank account may be depleted while the charges are investigated if someone gains access to your account and uses a debit card to make payments. You are protected from this type of situation by using a credit card.
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Minimize Your Account Balance
Cash apps may be able to help you keep track of your balance, but they aren’t needed. Hoch says, “It’s not going to benefit you at all.” “You’re not making much money.” If you intend to keep a balance for budgeting or other purposes, keep it to a bare minimum, so you don’t risk losing a large amount if anyone gains unauthorized access to your account.
Keep Your Payments Private
Venmo is a social media platform that allows users to make their purchases public. Even if you think you’ve just exchanged your payment details with coworkers, it’s possible that more people have access to it than you think.
“Friends of friends will see your exchanges even though your account is set to ‘only,'” says Rachel Vrabec, founder of the digital privacy service The Kanary. Instead, she suggests maintaining a private account. “Payment information seems harmless, but it never hurts to have an extra layer of privacy about who you send money to and receiving money from.”
Limit Personal Information in the App
People should avoid giving payment apps any personal information that isn’t necessary. Many cash applications, for example, make a photo and a phone number optional. If you want to use Venmo’s “friends” feature, Vrabec suggests giving your name an alias.
“Consider creating an alias email address (to register your account) that forwards information to your primary email,” Vrabec suggests, “because PayPal is a common target for hackers and has been hacked in the past.” Fraudsters would not be able to enter your primary email address, which is connected to other websites and services if your account was compromised.
Reduce Your Payment Fees
It is relatively simple to avoid fees on many websites. Sending money to another person using a particular account balance, a bank transfer, or a debit card is normally free.
Using a credit card to move money, on the other hand, can incur a fee. Not only does the app charge a fee, but the credit card company may classify the transaction as a cash advance. The lender will then charge its own fee and a higher interest rate for these transactions.
“Both PayPal and Venmo will try to convince you to pay them in order to receive your money faster,” Vrabec says. If you don’t need an immediate transfer, sending money to and from your bank account is normally free.
Pay Online Retailers Confidently
PayPal started as a way to send money from one person to another, but it is now accepted on a number of websites as a form of payment. “Other than a one-time (use) wallet,” Hoch says, “it’s probably one of the strongest mechanisms for making internet transactions.”
Using a credit card to make a merchant payment through PayPal is free, and there is an added bonus. According to King, “it reduces the number of places where your card information is stored.”
Avoid Payment App Scams
Scammers attack payment apps like PayPal and Venmo using a variety of methods. They may send phishing emails posing as bank emails, claiming that an account has been locked or that a significant transaction has occurred. Open the app on your phone or type the website address into a new tab to log in and verify the message’s validity if you’re concerned about your account’s status. “Do not open emails from unknown senders,” King advises.
People sending Venmo payments at random using stolen credit card numbers is another popular scam. They then notify the person who received the payment that it was sent in error and that it should be returned. Hoch recommends contacting Venmo first to double-check the validity of the original transaction.
“Block someone you don’t know if they ask for money repeatedly,” Vrabec advises.
Review Privacy Policies
Before you use a payment app or service, read the company’s privacy policies. Examine the permissions required by the service’s app, as well as the data it collects and shares. If you’re unhappy with one company’s policies or permissions, you might be better off using a different cash app.