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Venmo vs. Bank Accounts: Which is Your Best Option?

5/29/24  | Emily Knuteson, Relationship Banker

Many people use and love their Venmo accounts, but storing money may not be the best practice for your finances. In today’s modern world, we have many different tools to help our finances, but those tools should remain as an aid to your traditional bank account. While Venmo and other tools are convenient, they tend to miss a handful of important features that banks cover. In this post we are going to discuss the benefits of these tools, but overall, why a bank account is the spot to house your finances, and ending with some tips to using Venmo alongside your bank account.

First, NerdWallet describes Venmo as a platform that lets users send money person-to-person in an instant and with Venmo’s millions of users, it is easy to take your wallet cashless, sending payments wherever you go. While Venmo has amazing benefits like those listed above, it also has its drawbacks. For example, due to Venmo being an online platform, customer service is hard to demonstrate and typically slower than a physical bank. There are no physical branches to complete banking needs and Venmo’s customer care representatives can be hard to reach since customer care is completely over the phone. Next, Your Venmo account and its balance do not earn interest, however your bank account does earn interest benefitting you in the long run.

Another big difference that should be at the top of your considerations is that your Venmo account is not federally insured. Banks accounts are legally required to insure each of your accounts up to $250,000, when life happens your finances are safe in your bank account. That does not mean Venmo is not safe to use in addition to your bank account, Fintech Freak describes the measures that Venmo uses to keep customers safe on their platform. For example, Venmo has an encrypted platform on secure servers, Venmo requires account verification when using the platform, and lastly Venmo provides session guards – blocking unusual activity on your account that may occur.

At the end of the day, Venmo is a great tool, but needs to be used carefully. A bank is the safest place to hold your money long-term. Here are some best practices when using Venmo in addition to your bank account: 

  1. Link your Venmo account to your bank account or debit card. This makes transferring your balance easy and keeps your money secure at the bank.
  2. Minimize the balance you keep in your Venmo account. If you like to have funds in your Venmo account for emergencies, keep the balance as small as possible to avoid bad circumstances and increase the security of your funds at the bank.
  3. PC Mag reminds us to keep our Venmo payments private. When setting up Venmo your payments are public by default, meaning anyone on Venmo can see who you are paying, what it’s for, and the timestamp on the payment. For personal safety, keep it private!
  4. Always know and check who you are sending payments to! Scammers have become a large part of today’s financial world, know who you are sending money to and always triple check you’ve got the right recipient.

Remember, Venmo can be a great addition for your finances, but shouldn’t be used as your main account. Banks are here to protect you and your finances, whatever the circumstance may be. Visit us at any of our branches to talk about how best to use your digital wallet.

Emily Knuteson is a Relationship Banker at Altabank. She loves exploring marketing concepts and leaning more about the world of banking.