Consumer Adviser Clark Howard is warning consumers against storing money in payment apps, cautioning that many of these digital services lack deposit insurance.
Financial platforms increasingly encourage users to store idle cash by offering what appear to be attractive interest rates.
However, accounts without Federal Deposit Insurance Corp. protection leave consumers with no way to recover their funds if a company goes out of business or loses track of the money.
Without federal insurance, money deposited into digital payment apps can disappear permanently if a company fails.
Uninsured accounts provide no legal claim or safety net for users to regain their money if an app company collapses or misplaces deposits.
Howard urged users to refrain from keeping funds in payment platforms unless the accounts carry federal deposit protection.
“This is a bad idea until and unless it’s FDIC insured,” Howard said. “Because that means that if they go bust, your money’s still safe.”
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