How to Protect Yourself on Venmo in 5 Minutes

Technology online banking money transfer, e-commerce concept. Happy young woman using smartphone with dollar bills flying away from screen isolated on gray wall office background.

With Venmo being one of the most popular ways to send money, it makes sense to wonder what’s keeping your personal data and digital wallet safe. Venmo has made strides to improve its security in the past two years, but here’s the short answer to how safe Venmo is—protecting yourself comes almost entirely down to you.

How to Keep Your Personal Info Safe on Venmo

It takes only five minutes to make your Venmo account more secure by doing three things.

1. Change the default audience

Venmo sets its default audience to public, which means anyone can see your transactions. Venmo never displays the amount you pay someone, but everything else is fair game. Strangers can see names (both yours and the recipient’s) and payment messages (e.g., “thanks for the b-day dinner”), which can make it easier for someone to impersonate you and request payments from friends or family.

How to: Go to Settings, under the Sharing category (called Privacy & Sharing on iOS) select Default Audience, and change to “Participants Only” (the default setting of Venmo is set to “Public”). If you don’t want to let go of the social aspect of Venmo, at the very least change the default audience to “Friends” so only friends can see your payment details and messages. Not only will changing the default audience setting make you less susceptible to fraudsters, but you won’t have coworkers find out you didn’t invite them out for drinks after work.

2. Turn on alerts and notifications

Venmo has gotten better about notifying users of activity on their accounts, but you may need to tweak a few settings to ensure you’re never in the dark if something happens. For example, by default Venmo will alert you to account activity via email. However, if you’re the type of person who avoids checking your inbox or gets drowned in emails every day, an important Venmo account notification could get lost.

How to: You can turn on text notifications or customize alerts by going to Settings, selecting Alerts and Notifications, and then choosing Push, Text, or Email Notifications. Alerts and notifications are incredibly easy to personalize, so do what works best for you. Setting up the right alerts will help you stay on top of what’s happening on your Venmo account.  

3. Set up a PIN code

Even if you already have a PIN for your phone, you should set up a separate one for Venmo. If someone were to come across your unlocked phone, they could immediately open your Venmo app and mess around with your money. Adding a separate PIN for the Venmo app provides yet another layer of security for you to fall back on should your phone fall into the wrong hands.

How to: Go to Settings and select PIN Code under the security settings (steps may vary on iOS). Follow the instructions to set up a four-digit PIN, and you’re good to go. Now, whenever the Venmo app is opened, it will immediately ask for the PIN.

What Venmo Does to Protect You

To remain compliant with federal banking standards, Venmo uses the same type of data encryption and storage you would expect from an online bank. For many, just knowing that much may provide some comfort. However, though Venmo makes efforts to keep your data secure, it does not offer buyer or seller protection for unauthorized third parties. You may wonder why that is, but it goes back to the purpose of Venmo—it’s a service for sending money to friends and family, not strangers.  

If you want to stay safe on Venmo, simply don’t send money to people you don’t know. Venmo isn’t meant for purchasing Lady Gaga concert tickets from someone you found on Craigslist.  

In the past, Venmo didn’t offer other security features, like two-step authentication, but now two-step authentication is on every Venmo account by default (see image). If you’re unfamiliar with two-step authentication, it’s when you try to log in to an account from an unfamiliar device (computer, smartphone, etc.) and you’re required to enter a passcode sent via text. It’s an awesome security feature, and you should be using it for more than just Venmo.  

One More Thing to Know about Venmo

There is one extra step that will help you stay protected on Venmo, and that is using a credit card instead of a debit card or checking account. Yes, there is a 3% fee on transactions with a credit card, but most credit cards won’t hold you liable if you’re a victim of fraud.

Note: If you lose your phone or it gets stolen, revoke phone access by logging in to Venmo via computer and contact Venmo immediately.

Is Venmo Safe to Use?

The real answer lies with you. If you take five minutes to set up the security settings (create a PIN code, turn on alerts, etc.) and change the default audience—don’t ever set it to “Public”—you’ll make yourself a much harder target for fraud. It’s not a perfect service, but Venmo is much better about its security now, so the rest is up to you.

Image: istock

The post How to Protect Yourself on Venmo in 5 Minutes appeared first on Credit.com.

Sick of Overdraft Fees? There’s an App for That

Whether you’re building a top-notch gaming PC or itching for the latest smartphone, there are credit cards that can help tech nerds.

Remember when banks feared that new consumer protections would make it harder to charge overdraft fees? That those protections would imperil the financial industry and lead to the death of free checking accounts? Well, overdraft fees set something of a record in 2016, with banks collecting $33.3 billion last year—their highest level since 2009, according to a report by Moebs Services Inc.

So why are overdraft fees on the rise? Jonathan Morduch and Rachel Schneider, in their book “The Financial Diaries: How American Families Cope in a World of Uncertainty,” conclude that much of American financial suffering (and budgeting missteps) are the result of month-to-month cash-flow problems and income volatility.

Fortunately for anyone who has struggled with money management, there’s an app to help with that. In fact, there are several. Here’s a closer look at four cash-flow management apps—and what they can do to help you better manage your monthly money.

1. Dave Warns of Impending Overdrafts

One of the apps making the most noise right now goes by the name Dave. It launched with a bit of fanfare in April, thanks to an investment (and loud endorsement) from billionaire Mark Cuban. While Dave has a feature that works like a cash advance, its main purpose is to warn users before they make a purchase or pay a bill that sends their account into the negative, according to CEO Jason Wilk. The app links to consumers’ checking accounts and watches spending patterns and upcoming automatic payments, then tries to give seven days’ notice of a coming cash crunch.

“We don’t consider ourselves in the same market as other credit products,” Wilk wrote in an email. “First and foremost we are a product that alerts people about their upcoming bills and expenses so they have plenty of time to make a decision about their options. We consider this as much to be a smart budgeting app to avoid a negative balance.”

Consumers pay $1 a month for the app. Dave offers small cash advances (up to around $75, Wilk says) to cover what could have been an overdraft. Dave pays itself back as soon as the checking account has enough money in it. Right now, per-transaction fees are $3.50—the fee the firm pays the bank—and Dave asks only for a donation in the form of a tip. While some have raised concerns that the “tip” could end up being as expensive as payday loan interest, or that consumers who rely on Dave could end up stuck in a payday-loan-like cycle of repeat borrowing, Wilk argues that is unlikely.

“We don’t charge interest and we don’t run credit,” he noted. “We also don’t have a set payback period either, so our customers don’t get caught in a cycle of late fees or interest penalties.”

2. Propel Offers Easy Government Benefit Management

Other apps also try to help consumers understand their month-to-month spending habits. The Common Cents Lab at Duke University recently released a report on an experiment run using an app called Propel, which helps lower-income consumers manage their SNAP benefits. The researchers found that many consumers fall prey to what they call the “windfall” state of mind when a paycheck (or government assistance) arrives, leading them to overspend in the first few days after their money is deposited. By simply measuring out payments on a weekly—rather than a monthly—basis, Propel users stretched their food benefits an extra two days, the researchers said.

“For a family depending on SNAP to put food on the table, this can equal about six extra meals that month, just from this simple intervention,” Common Cents said in the report.

3. Float Provides Small Loans without Hard Credit Inquiries

Float, an app that launched in February of 2017, offers what feels like traditional payday loans—but with a twist. Instead of looking at credit scores, Float links to consumers’ checking accounts and examines spending habits to make lending decisions “without the negative effects of a hard credit inquiry,” the firm’s website says.

Users qualify for something like a small-dollar line of credit they can access with a simple text message like “get $100.” Most loans come with a 5% fee and must be paid back in less than a month. While it’s not the same as Dave’s tip-based fee system, that small transfer fee—and the similarly small late fee of $15—is much less than many payday loan companies charge.

According to Float’s website, the app is available only to residents of California and Utah at the moment.

4. Activehours Grants Easy Payday Insights and Advances

Like Dave, Activehours fronts the money for its users and asks only for tips. It links to hourly workers’ accounts and advances pay they’ve already earned but haven’t yet received in a paycheck. Employees from over 25,000 companies are using it, said spokesperson Kate Austin in an email. The app is designed to help cash-poor consumers get access to money they’ve earned more quickly. The only fee is a voluntary “tip.”

“We’re actually not a loan at all,” Austin said. “We believe people should be given access to the money they earn as they earn it. So, we created an app that lets people see how much they have in their bank account as well as what they’ve earned but haven’t yet been paid for,” she said. “Then, if they need access to their earnings, they can use the Activehours app to move it immediately to their checking account.” She stressed that users always have the option to pay nothing for the paycheck advance—certainly a better option than some payday advance products offered by banks and non-bank lenders.

Fighting the Ongoing Cash-Flow Problem

None of these apps solve the fundamental problem facing consumers who might be tempted to use them: not enough income to escape the “just make it to the end of the month” cycle. Any cash-infusion tool is just a stop-gap solution. It might work once or twice a year—and “The Financial Diaries” suggests some consumers could benefit from such occasional cash-crunch help—but payday borrowers often find they can’t repay their loans when payday arrives. Back in 2014, the Consumer Financial Protection Bureau found that four out of five payday borrowers rolled their loans over at least once, and over one-fifth of the loans were renewed six times.

Users of any cash-flow stop-gap solution face the same issue: borrowing money just in time to make this month’s rent isn’t going to solve the problem of next month’s rent.

Consumers intrigued by the balance-monitoring features of apps like Dave might find similar tools offered directly by banks or by services like Mint.com. And while it may not be the long-term solution some may desperately need, anything that provides alternatives to triple-digit payday loans is probably a welcome addition to the marketplace.

Worried about Overdrafts? Do This Right Now

You can take more direct steps to avoid overdraft fees at your bank. Most banks allow you to link savings accounts or credit cards (from the same institution) to your checking account, which provides you with an extra layer of backup in the event of an overdraft. There is usually a fee to use it, but it’s far less than overdraft fees or bounced check fees.

Finally, make sure you opt out of your bank’s overdraft protection, a service that will cover transactions you don’t have the money for—at the cost of a $20+ fee. Even if you think you are opted-out, it’s worth double-checking. This prevents only certain kinds of overdrafts, such as withdrawing more cash at an ATM than is available in your balance. You can still “go negative” if you write a too-large check, for example, but reducing the ways you can accidentally overdraft (and get hit with hefty overdraft charges) is always a good idea.

If you’ve taken all of the above steps and are still having trouble managing income flow, it might be time to consider applying for a credit card. Before you settle on a card, though, it’s wise to check your credit report first—which you can do for free at Credit.com—so you can find a card that matches your credit rating.

Image: Peopleimages

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How I Finally Ditched My Big Bank Account

Karachi, Pakistan - November 29, 2011: A young man cutting Visa credit card to quit the credit cycle in Karachi, Pakistan.

I’ve been a Wells Fargo customer since January 2013. I opened my first credit card with the bank, my first and second set of business deposit accounts, and had my personal deposit accounts with them. In total, I had five accounts with Wells Fargo.

I started having second thoughts about my loyalty to the bank in September, when revelations of Wells Fargo’s fraudulent sales tactics came to light. From 2011 to 2015, in an effort to boost their sales figures, Wells Fargo representatives opened more than 1.5 million deposit accounts and 565,000 credit card accounts without customer authorization, according to the Consumer Financial Protection Bureau. As a result, customers were charged a total of $2 million in fees. Wells Fargo agreed to pay a whopping $185 million fine to settle those claims, which were filed by the CFPB.

The scandal left me reconsidering my decision to bank with Wells Fargo at all. This month, I made the decision to close all of my remaining accounts with Wells Fargo and open up a new account elsewhere. I don’t know yet how many more Wells Fargo customers will join me, although the company’s third quarter earnings report indicated its retail business hasn’t survived the scandal unscathed. The bank saw a 25% year-over-year decline in new checking account opens, and credit card applications were down 20%.

Still, the bank’s customers are known for being loyal. Last year, Wells Fargo ranked the highest in customer satisfaction, beating Bank of America, Chase, and Citibank.

For me, the damage was done. It was time to switch banks.

Making the Big Switch

Moving to a new bank is hardly a painless process. That could be why so few Americans make the effort, despite a rise in onerous bank fees at large retail banks. Only 17% of account holders switched their primary financial institution in 2014, according to one study.

Here’s how to do it:

  1. Breaking up with my big bank

I quickly realized it was not going to be a clean breakup. A search on Wells Fargo’s website showed me that my account had to be empty before I could close it. That would mean either making one big cash withdrawal, or opening a new account at a different bank first and transferring the funds over.

I decided to go with option 2. I would open a new bank account and transfer my Wells Fargo balance over.

  1. Choosing a new bank

I used the MagnifyMoney checking account tool to guide me in the right direction. In the end, I chose to open an account with Ally Financial, an online-only bank. I had been considering opening an account with an online bank for a while. Online banks typically don’t charge as many fees as big banks because they have much lower overhead costs.

I opened a savings account, too. I was only earning 0.01% at Wells Fargo. Ally offers a 1% yield on its personal savings accounts, which will be a big incentive for me to save more.

  1. Transferring funds to my new bank  

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It took me five minutes to open a checking and savings account at Ally.com. At the same time, I linked my Wells Fargo account to my Ally account, which would allow me to transfer my funds over.

  1. Closing my Wells Fargo account

Once my account was empty, I sent an email to Wells Fargo through the bank’s online portal requesting the account be closed. Within 24 hours, a representative sent me a message saying my account would be closed in four business days.

  1. Keeping my zombie account at bay

Here’s the big risk when you close a bank account: It leaves a trace of itself behind. And any type of transaction — deposit or withdrawal — can reawaken the account. (They call them “zombie accounts” for a reason.) You may not even realize your old account was opened again, and you could rack up unnecessary fees for months or years until you notice it.

It only took me a few days to mess this one up. I closed my Wells Fargo account very close to my normal payday. I didn’t update my direct deposit account quickly enough, which meant my paycheck went into my old Wells Fargo account rather than my new Ally account. Suddenly, my “closed” account was reopened again. And I had to repeat the process — withdrawing funds and closing the account all over.

  1. Erasing my banking past

I decided to shred the debit cards that were previously linked to my Wells Fargo account. I also shredded my checkbook. It’s important to take these steps to avoid identity theft. Like I said, even the smallest transaction could reawaken my old bank account.

  1. Updating all my payment accounts

I make most of my recurring subscription payments through a PayPal account, so that made life simpler. I only had to change my bank account linked to PayPal. Next, I updated Venmo, which I use frequently to pay my roommates my share of rent and utilities. I changed my Amazon account information, went ahead and updated the rideshare apps I frequently use like Uber and Lyft, and updated my automatic bill payments with T-Mobile.

You should do this with any other apps you use that are linked to your old debit card or bank accounts. When you do change the information, make sure to delete your old bank account information so there’s no chance of accidentally charging the account.

If you use any online resources or applications to manage your finances, you should update them to keep information current. This is optional, but important if you want to keep track of where your money is going. For me, that meant updating my Mint.com account.

With all of that done, the bank switch was complete. It only took about an hour execute the steps above, and my Wells Fargo accounts were all closed within four business days once I got the closing process restarted.

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