Buzz
Though I still prefer cash over digital payment apps, Venmo has become an unavoidable part of modern life for splitting bills, tipping service workers, and maintaining social connections. The app lets you hold a balance, essentially making it like a digital bank account. However, most users don’t need to keep a Venmo balance, and it can even be risky. Here's why you probably don't need funds in Venmo, and how to add money if you choose to do so.
Reasons to Avoid Keeping a Venmo Balance
Venmo isn't a traditional bank. It doesn’t offer the same protections that an FDIC-insured checking or savings account does. If anything were to happen to Venmo, you could lose your money with little recourse. Plus, Venmo balances don’t accrue interest like a savings account, so there's no financial benefit to keeping money in it.
In fact, holding a balance in Venmo could increase your exposure to scams. Scammers tend to favor payment apps over traditional banking methods. With money already in Venmo, it becomes easier for a scammer to deceive you into transferring those funds to them.
For most people, it’s more practical to only transfer money into Venmo when a payment is necessary. Keep the rest of your funds in a proper bank account where they are protected and can potentially earn interest.
When it makes sense to have a Venmo balance
There are some rare occasions where having a Venmo balance might be useful. Having funds readily available in Venmo allows for quick payments to other users without needing to transfer money each time. This can be beneficial for frequent Venmo users who often send and receive payments within the app.
A Venmo balance also simplifies splitting bills and meals without having to provide bank details. If you live with roommates who all use Venmo, keeping some money in the app to cover your share of group expenses can be quite convenient.
Adding money to Venmo is a simple process, but it's important to understand the associated risks. Only keep the amount you need available on the platform.
Steps for adding funds to your Venmo account.
To add money, open the Venmo app and tap your profile icon in the top-left corner. Then, navigate to 'Balance' and select 'Add money.'
You can fund your Venmo account using a linked bank account, debit card, credit card, or prepaid card. Note that credit card transfers incur a 3% fee, but transfers from bank accounts and debit cards are free of charge.
Enter the desired amount to add and select your payment method. Follow the prompts to finalize the transaction. The funds should appear in your Venmo balance within 1-3 business days.
Think of your Venmo balance like cash. Keep only what you need for easy payments. If Venmo isn’t something you use often, there's no need to keep a balance. For most, paying directly from a bank account or card is the more efficient choice. For additional tips, here's my guide to Venmo etiquette.
