The article "The perils of using payment apps as your bank account" discusses the potential risks associated with using fintech applications like Venmo and Cash App as primary banking services. While these apps offer a user-friendly experience and low fees, the lack of FDIC insurance protection creates vulnerability for users if the parent company were to go bankrupt. The article highlights a recent incident involving the failure of Synapse, which left many users unable to access their funds, prompting calls for regulatory reform. It also emphasizes the difference between neobanks, which may provide some FDIC coverage through partnerships, and money transmitters like Venmo, which do not. The author addresses the misconceptions surrounding perceived safety, the benefits and problems of using fintech apps, and the importance of consumer education regarding banking regulations.

Key Points:

• Many fintech apps like Venmo and Cash App are not chartered banks and do not offer FDIC insurance directly.
• Customers can be at risk of losing access to their funds if a fintech company fails, as seen in the collapse of Synapse.
• Fintech apps often feature the FDIC logo, but customers may not fully understand its implications or the limits of their coverage.
• Neobanks can offer pass-through insurance through partnerships with chartered banks, but not all deposits are fully insured.
• The unbanked population, including marginalized groups, may find fintech apps beneficial due to lower fees compared to traditional banks.
• Customers should exercise caution, conduct thorough research, and avoid transferring large amounts of money without understanding the associated risks.
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