I'll always prefer cash to payment apps, but it seems like Venmo is an inescapable part of splitting dinner, tipping baristas, or otherwise functioning as a social being these days. The app allows you to maintain a balance, essentially turning it into a pseudo bank account. But for most people, carrying a Venmo balance is unnecessary and potentially risky. Here's why you likely don't need money in Venmo, and how to add funds if you decide you want to.
Why you should avoid a Venmo balance
Venmo isn't a bank. It doesn't offer the same protections as an FDIC-insured checking or savings account. If something happens to Venmo as a company, you could lose that money with little recourse. Additionally, Venmo balances don't earn interest like a savings account. So there's no financial advantage to keeping money there.
In fact, having a balance in Venmo may make you more vulnerable to scams. Scammers often prefer payment apps over traditional bank transfers. With your money already in Venmo, it can be easier for a scammer to trick you into sending those funds their way.
For most people, it's smarter to transfer money into Venmo only when you need to make a payment. Leave the rest of your funds in a real bank account where they are insured and may earn interest.
When a Venmo balance makes sense
However, there are some limited cases where carrying a Venmo balance could be helpful. Having funds ready in Venmo allows you to quickly pay other users without needing to transfer money each time. This may be preferred by active Venmo users who frequently send and receive payments within the app.
A Venmo balance also lets you split bills and meals without needing your bank info handy. If you share living expenses with roommates who all use Venmo, keeping some cash there to pay your share of group bills can be convenient.
For these use cases, adding money to Venmo is straightforward. Just be aware of the risks, and keep only what you reasonably need available there.
How to add money to Venmo
To add funds to Venmo, open the app and tap your profile icon in the top-left corner. Go to “Balance” then select “Add money.”
You can add money from a linked bank account, debit card, credit card, or prepaid card. Venmo charges a 3% fee for credit card transfers, but transfers from bank accounts and debit cards are free.
Enter the amount you want to add and the source payment method. Follow the prompts to complete the transfer. Added funds should be available in Venmo within 1-3 business days.
Remember, treat your Venmo balance like cash. Only keep what you need available to make convenient payments. And if you don't regularly use Venmo, don't bother funding a balance at all. For most people, paying directly from your bank account or card is the smarter way to use Venmo. For more, here's my guide to Venmo etiquette.