Beware This Pitfall of Using Payment Apps

by Maurie Backman | Published on Sept. 15, 2021

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Two people sitting at a window table in a restaurant and looking at their cellphones.

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Payment apps may be convenient, but they have their drawbacks.

I'll admit that when it comes to technology, I haven't always been an early adopter. I was one of the last people in my circle of friends to upgrade to a smartphone, and I resisted it as long as possible.

I also didn't start using payment apps until recently. But I have to concede, apps like Venmo, which I use frequently these days, are pretty convenient.

I have young kids, I'm often chipping in for teacher gifts or thank you presents for soccer coaches. And sending or receiving money via a payment app is much easier than collecting envelopes of cash and having to keep track of everything.

Still, I've learned there's one danger you might encounter when using payment apps. And it's something you'll want to avoid.

Track your spending

To use a payment app, you generally need to link it to a bank account. I happen to have two checking accounts -- one I use often, and one I use less frequently. I decided to tie Venmo to the checking account I don't use as much, thinking it would largely be earmarked for that purpose only.

But then I started using Venmo more often. For example, I would reimburse friends who were kind enough to grocery shop for me during the pandemic, when I was trying to keep my shopping trips to a minimum.

But while I was using Venmo more and more, I failed to look at my checking account balance to see how much money I had left -- until it finally dawned on me that I hadn't reviewed that account in quite some time. Well, it's a good thing I checked in when I did, because it turned out I was down to my last $50 in that account.

Now thankfully, that checking account didn't have a minimum balance requirement, so almost depleting it didn't cost me anything. And I was able to quickly transfer more money into that account so it would be there the next time I needed to use Venmo.

But that mistake served as a wakeup call for me, and it also showed me the dangers of using payment apps. When you pay with an app like Venmo, it can be hard to track your spending. That puts you at risk of going overboard and landing in debt. And, it could put you in a situation where you inadvertently whittle down your checking account balance and get slapped with fees as a result, depending on the account you have.

As such, if you're going to use payment apps, I suggest taking the same approach I take with my credit cards -- check your balance often. I make a point to see what my credit card balance is each week so I don't end up with a frighteningly large bill at the end of the month. And now, I do the same with my Venmo purchases.

There's nothing wrong with using payment apps -- if you use them carefully. And a good way to do that is to track your spending judiciously.

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