You’re taking a huge risk by linking Venmo or Paypal to your primary banking accounts.

by llort_tsoper

Your checking/savings accounts are very secure. They are heavily regulated including numerous laws designed to protect consumers.

Venmo/Paypal is none of the above. It is possible for someone to gain access to your Venmo Account (either by hacking in or even by sending you an unauthorized transfer). Your connected checking/savings account can then be drained.

A lot of people mistakenly assume than Venmo offers the same or even better consumer protections against fraud as their bank account, but this is untrue. Having a secure checking account and then connecting it to Venmo/Paypal is like locking your door, arming your alarm and then leaving all your windows wide open.

What should you do instead?

There are at least two better options:

For infrequent users, use a credit card (not a debit card) to send money, and just leave incoming transfers in Venmo.

Yes, you will have to pay a fee for each CC transaction (usually 3%), but that 3% pays for an additional level of fraud prevention/protection from the CC company. For incoming transfers, it’s not going to hurt anything to leave a few hundred dollars parked in Venmo.

For frequent users, link an Air Gap checking account to your Venmo.

Lots of industries use air gaps as part of their safety/security protocols. An Air Gap Checking Account is an account that’s connected to Venmo and not connected to anything else. If you want to transfer money to/from your Air Gap account, you’ll need to physically withdraw cash from one account and physically deposit it in the other.

Sure, both of these options may be inconvenient, and they may cost some extra money in CC fees or account fees. But here’s the thing you need to keep in mind: if you can’t afford to pay 3% in CC fees, or you can’t afford to leave $200 parked in Venmo, or you can’t afford the account fees to open another checking account, then you definitely can’t afford to have your primary banking accounts drained by fraudulent Venmo charges.