Is Cash App FDIC Insured?
Written by
Dawn Allcot
Edited by
Elizabeth Constantineau
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In recent decades, peer-to-peer payment services have grown in popularity and forecasters don’t see that growth slowing anytime soon. By 2026, annual P2P transaction value will likely exceed $2.2 trillion for services like Cash App — a financial services company that offers more than just P2P payment capabilities.
Cash App currently has more than 50 million active users. But is Cash App FDIC insured and safe to keep your money in? Keep reading to find out.
Is Cash App FDIC Insured?
If you have a Cash Card*, the money you hold in your Cash App account is FDIC insured1 for up to $250,000 per account holder through one of Cash App’s partner banks, Wells Fargo Bank. Cash App indicates that its Visa debit card services are provided through Sutton Bank. Other sources indicate that direct deposit services are provided through Lincoln Savings Bank, but there is no mention of the partnership on either company’s website.
If you don’t have a Cash Card, it’s important to recognize that your money held in Cash App is not FDIC insured. If Cash App goes out of business, you could lose any money in the account.
Funds stored on your Cash Card are FDIC insured through Cash App’s partner banks by what is called “pass-through” insurance. The Consumer Financial Protection Bureau, however, warns against using these payment apps that have pass-through insurance as a bank.
Pass-through insurance covers your deposits up to legally allowable limits if the bank affiliated with the app fails — not if the app itself fails or goes bankrupt. “It doesn’t insure you against the failure of the payment app company. This means there could be a risk of losing your money in the event the company fails,” the CFPB said.
What Happens to Your Money if Cash App Goes Out of Business?
If Cash App fails, your money may still be protected through the bank insuring it, according to the CFPB. Cash App follows regulations set forth by the Financial Conduct Authority, the organization it is authorized as an Electronic Money Institution through.
According to Cash App’s website, other UK banks are protected through the Financial Services Compensation Scheme. Since Cash App is not a bank2, they use a strategy called “safeguarding.”
The safeguarding process ensures that “most, if not all, the money you hold in your Cash App account at the time of failure will be paid back to you,” according to their website. But, there could be delays in accessing your money. For unbanked individuals who rely on Cash App for all their financial needs, not being able to access money to pay bills or buy food could be catastrophic.
It’s safer to keep the money you’ll need immediately in Cash App, or on your Cash App card, and transfer additional funds to an FDIC-insured bank.
Can You Use Cash App as a Bank Account?
With services like direct deposit and a Visa debit card, you can use Cash App as a bank account. You don’t need a bank account to open a Cash App account, since you can fund your account through direct deposit paychecks, tax returns or through cash deposits at select retailers across the U.S.
Cash App accepts direct deposits and offers a routing number and account number just like a bank. Your Cash Card is also accepted anywhere that takes Visa. You can add your Cash Card to mobile wallets like Apple Pay and Google Pay for added convenience.
Unlike some banks, Cash App has no monthly fees and no overdraft fees. However, Cash App lacks some of the features of traditional or online banks, such as:
- Interest-earning checking or savings accounts
- Money markets or CDs
- Relationship banking for customers with higher balances
- Check-writing capabilities
Plus, it’s important to note that Cash App, on its own, is not insured by the Federal Deposit Insurance Company.
Is Cash App Safe To Keep Money In?
There’s more to keeping your money safe than just FDIC insurance in the unlikely event of a bank failure.
On its website, Cash App says it uses cutting-edge encryption and fraud detection technology to keep your data and money secure.
Cash App also monitors accounts for “anything out of the ordinary.” Cash App will cancel potentially fraudulent payments and return funds to your Cash App or linked bank account. You can expect the funds either instantly or within 1 to 3 business days.
The Cash Card uses chip and NFT technology for transactions. This allows users to avoid magnetic stripe purchases, which can be prone to fraud.
Will Cash App Refund Money If You’re Scammed?
According to Cash App’s terms of service, they can’t guarantee a refund if you’re scammed. By using the money transmission service, you assume that risk.
Bottom Line — Should You Use Cash App To Hold Your Money?
Cash App is convenient and does offer some of the same services as a bank but it does not replace a traditional or online bank with FDIC insurance. If you are looking to keep your money in a safer place, you might consider a free checking account with no minimum balance requirements if you are opening a bank account for the first time.
FAQ
Here are the answers to some of the most frequently asked questions about Cash App.- Is Cash App safe for direct deposit?
- Cash App is safe for direct deposit. The company uses advanced encryption and fraud detection technology to keep your funds safe.
- Can you use Cash App as a bank account for direct deposit?
- Cash App itself is not a bank, but offers direct deposit through its banking partners.
- How long does direct deposit take on Cash App?
- Cash App generally tries to release funds immediately, sometimes resulting in users receiving direct deposits up to two days sooner compared to some other banks. Funds from direct deposits become available to you within 1-5 business days of the payment being sent.
- Is Cash App safer than a bank account?
- While Cash App is generally safe, it is not safer than a bank account since P2P services tend to be targeted more frequently by scammers than banks.
Micah Gause contributed to the reporting for this article.
Information is accurate as of April 26, 2024.
*Prepaid debit cards issued by Sutton Bank.
1Balance is FDIC insured through Wells Fargo Bank, N.A., Member FDIC for up to $250,000 per person.
2Cash App is a financial platform, not a bank. Banking services provided by Cash App’s bank partner(s).
Editorial Note: This content is not provided by any entity covered in this article. Any opinions, analyses, reviews, ratings or recommendations expressed in this article are those of the author alone and have not been reviewed, approved or otherwise endorsed by any entity named in this article.
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- Money Crashers. 2023. "What Bank Is Cash App? – Find Your FDIC Partner Bank."
- Consumer Finance Protection Bureau. 2023. "Consumer advisory: Your money is at greater risk when you hold it in a payment app, instead of moving it to an account with deposit insurance."
- Pew Research Center. 2022. "Payment apps like Venmo and Cash App bring convenience – and security concerns – to some users."
- Business of Apps. 2023. "Cash App Revenue and Usage Statistics (2023)."
- EMarketer. "US Peer-to-Peer (P2P) Mobile Payment Transaction Value and Users, 2020-2026."
