Money Rehab with Nicole Lapin - Which Money App is Right for You?

Episode Date: August 17, 2021

There are so many apps out there for transferring money… Some good, some bad. Which one should you use when paying your friends back for coffee? What about when you’re sending rent money to your landlord? Learn which one is best for you and your moolah. Learn more about your ad-choices at https://www.iheartpodcastnetwork.comSee omnystudio.com/listener for privacy information.

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Well, it doesn't. Charge for wasting our time. I will take a check. Like an old school check. You recognize her from anchoring on CNN, CNBC, and Bloomberg. The only financial expert you don't need a dictionary to understand. Nicole Lappin. I know you're probably still recovering from whatever embarrassing charge you found in

your Venmo history after listening to our Venmo episode last week. But hold on tight, because today we're taking another digital deep dive into payment apps. For this episode, we can thank money rehabber Ian, who sent us this question. Hey, Nicole. I'm just getting in the freelance game and need some advice. I have my first graphic design client, and they're putting down $10,000 up front for a project I'm doing. They told me to let them know how they should pay me. So how should I do it?

So, Ian, there are a ton of players in the financial app space, and I am going to go through all of them in a minute. But in your case, I actually wouldn't go to a payment app for a ten thousand dollar payment. I'd actually recommend that you ask for an ACH transfer. And before we get too deep into it, what the fuck does ACH mean? Well, ACH stands for Automatic Clearing House. And if that doesn't help you understand the concept, well, I'm not surprised. Welcome to the world of finance jargon. To get into what an ACH transfer is, I want to get into what it isn't. Initiating an ACH transfer is not the same thing as wiring someone money. People often mix up wire transfers and ACH transfers because they both have

some top-level similarities. Both are bank-to-bank transfers where the money goes directly from the sender's account to the recipient's account. The difference is speed and cost. Wire transfers typically cost the recipient $15 to $25. ACH transfers, on the other hand, are typically free for both the payer and the payee. The one downside to ACH transfers is that they take a few business days for the money to hit your account, whereas a wire might take hours or even minutes. Because these types of transfers are bank to bank, you'll need to give the person paying you both your bank routing number and your account number. So you don't want to do an ACH transfer with just anyone. You want to make sure that the person paying you is trustworthy. All the better if they have a secure payment portal. So Ian, I've told you

what an ACH transfer isn't and is, and I am going to tell you why this is the best fit for you in this scenario at the end of this episode. But in the meantime, I'm going to take a second to play matchmaker with some of the other folks listening who are wondering, when I open my phone to pay someone, which platform should be my default? So let's talk about the apps. There are a bunch of apps out there for transferring money online, and seemingly more and more options pop up every quarter. There are similarities that you can expect from most apps. Moving money in and out of your bank account is typically free, but there's likely a fee if you need to move your money quickly or if you're using a credit card to send your payment. But there are some slight

differences that may make a big difference for you. Let's start with the big kahuna, PayPal. PayPal is a good fit for you if you're subletting from someone or if you're a baller and sending big bucks around left and right. With PayPal, if you verify some details, there's no limit to the amount you can send with your PayPal account, although there may be a cap on the amount that you can send in each transaction. That cap can be anywhere between $10,000 and $60,000, depending on the extent you verified your account. But even if you have a $10,000 limit per transaction, if you need to send someone more than that, you can still send multiple payments. You've probably noticed that a lot of e-commerce

sites use PayPal as a payment alternative to credit or debit cards. PayPal is actually one of the few payment apps that offers purchase protection. If you use PayPal to order something online and it never arrives, you can file for a full refund so long as you dispute the charge within 180 days. Hold on to your wallets, boys and girls. Money rehab will be right back. Now for some more money rehab. Moving on. Say you're someone who spends all their money in their extras spending category on going out with friends.

When you're hitting the town, you often go out in a big group. So big, in fact, because you are so popular that you need to push a few tables together to fit everyone. And you love your local waitress way too much to ask her to split the check 16 different ways. If this sounds like you, you're probably best suited for PayPal's cool younger sibling, Venmo. Fun fact, PayPal actually owns Venmo. The weekly transaction limit for Venmo is just under $5,000. $4,999.99. True story. Which should be all right for you if you need a payment app to help you settle up with friends after your night out. Venmo's interface is easy to navigate, so it's simple to send payments. Plus, Venmo is one of the most

popular apps, if not the most popular. This is helpful if you need to get a friend to pay you back for something because they're not likely going to be able to use the excuse, oh sorry, I don't have that app on my phone. Venmo is one of the better apps if you're in a pinch and you need to transfer money into your bank account ASAP. Pretty much all digital apps charge a fee if you need your money right away. But Venmo's fee structure lands pretty low at 1% compared to Google Pay and Cash app that are 1.5%. Next, if you're someone who's likely to forget about money sitting in an account that's not your bank, Zelle is right for you. Zelle is less of a standalone app and more of an extension of your bank.

With PayPal or Venmo, if someone sends you money, that money sits in the app until you actively transfer it into your bank account. With Zelle, if someone sends you money, it goes right into your bank account. Zelle becomes a little tricky because it's associated with your bank and therefore it's not one size fits all. You could have fees associated with transfers or limits on how much you can send. It really all depends on your bank. To send money through Zelle, you likely need to get in touch with your bank and have them walk you through the steps. If you're a jet setter, have international friends, or you don't have a U.S.-based bank, you're going to want to lean on Wise, which is formerly known as Transfer

Wise. Some platforms make it difficult or pricey to send money to people who don't have an American bank account. Venmo, for example, won't even let you set up an account if you don't have a U.S.-based bank. Wise makes it free and easy to send money to pals all over the world. If you're a no-frills kind of guy or gal, you may want to go with Cash App. And yes, that's the name of the app itself. Sometimes people will refer to this whole genre of apps like Venmo and PayPal as Cash Apps. But this is a cash app called Cash App. Confused? Cash apps, big advantage is that you don't need to have a Cash App account in order to receive money. So when you go to send someone some money on Cash App, you only need to put in the recipient's email

or phone number and you don't have to worry about finding someone's account information or asking them to download an app or create an account. If you dump anyone whose text messages go to green instead of blue, if you know, you know, and if you don't, you don't, then Apple Pay is for you. If you have an iPhone, Apple Pay comes pre-downloaded, so no assembly required. I will say, though, I advise some caution against using an app that's only compatible with one operating system. Maybe it's convenient, but you're going to have to supplement with another option. Just in case you do ever find it in your heart to become friends with an Android stand. If you have a squad straight out of a sitcom, a clique that's always together and maybe dreams of sharing a compound one day, Google Pay is probably for you. With Google Pay, it's easy to create groups within the app and split bills down the middle.

Similar to Venmo, with Google Pay, you're capped at 5K per transaction. But with Venmo, that's the limit for one-time transactions and your weekly spending limit. With Google Pay, there's a higher weekly spending limit of $20K. So if you need to send someone $6,000, with Venmo, you would only be able to send $5,000, and then you would have to wait another full week to send the remaining $1,000. With Google Pay, you'd be able to send the full amount in one day. You just have to wait another full week to send the remaining $1,000. With Google Pay, you'd be able to send the full amount in one day. You just have to split the payment into two transactions. If you're someone who's super worried about big brother or big sister,

then paper checks may be best for your sanity. According to the Washington Post, except for Google Pay and Apple Pay, most money transfer apps share some data with outside companies. Cash App and Zelle state in their privacy agreements that they share your information with companies that provide third-party analytics. Venmo and PayPal both use your data for joint marketing campaigns with financial institutions, according to their privacy agreements. And PayPal can use it to market its merchant partners to you. marketing campaigns with financial institutions according to their privacy agreements, and PayPal can use it to market its merchant partners to you. Although let's not forget that one of our OG producers, Catherine, did have $3,000 stolen from an intercepted Ursula check. I digress. All right, Ian, I told you I would come back for you. So you may be hearing these details on the

payment apps and you're thinking that one of these may be right for your business. But here's the kicker. Many of these apps have separate roles if you're using the platform for business. Take PayPal, for example. If you send your partner an invoice over PayPal, which the partner would probably ask you to do so they can track it for tax reasons, PayPal will pocket a fee that comes to around 3%. So from your $10,000 payment, Ian, that would be $300 of your hard-earned money washed away in fee land. You should not be applying a discount to yourself just to get a payment. That's why for business transactions, I'd recommend ACH transfers. For today's tip, you can take straight to the bank. When you're looking for an app to use

to pay friends, you should probably go with whatever's most popular in your friend group. You don't want anyone to cop out of paying you back because they need to take a day to download the app. Money Rehab is a production of iHeartMedia. I'm your host, Nicole Lappin. Our producers are Morgan Lavoie and Catherine Law. Money Rehab is edited and engineered by Brandon Dickert with help from Josh Fisher. Executive producers are Mangesh Hatikader and Will Pearson. help from Josh Fisher. Executive producers are Mangesh Hatikader and Will Pearson. Huge thanks to the OG Money Rehab supervising producer, Michelle Lanz, for her pre-production and development work. And as always, thanks to you for finally investing in yourself so that you

can get it together and get it all. You spend my money, money, money. You spend my money, money. You spend my money, money, money. You spend my money, money, money.