People who rob jewelry stores and banks are pretty bad, right? 🥸 Well, not as bad as people who rob bakeries. Those guys really take the cake! 🍰 Tip jar is to your left. Thanks for coming out!
When it comes to where to keep your hard earned money, fintech banks are the new kids on the block. 👾 But are they all they’re cracked up to be? More importantly, are they safe? 🤔
Here’s Five Fast Facts on fintech banks:
- 💲 Fintech 101 - A fintech company or bank uses tech to provide financial services. They lean on mobile apps and software to keep things running instead of brick-and-mortar banks. Popular examples of fintech banks include Chime and SoFi.
- 😱 One Big Oopsie - Six months ago, a San Francisco-based fintech company called Synapse filed for bankruptcy. It was a hot mess express and customers are still trying to recoup their money…to the tune of $90 million. This has some people spooked about the safety and reliability of fintech banks.
- 🏛️ Growing Pains - When a traditional bank fails, the Federal Deposit Insurance Corporation (FDIC) takes the wheel. The FDIC also insures up to $250,000 per account holder, per institution, per ownership category. Unlike regular banks, fintechs are not backed by the FDIC. Instead, they partner with a third party FDIC-insured bank that holds the money on a customer’s behalf. After the Synapse fiasco, the FDIC came up with a new rule to make sure fintech banks can better cover customers’ funds in an emergency.
- 🔃 This and That - The verdict? Most fintech banks are safe for your paychecks. However, it’s important to weigh the pros and cons. With a fintech bank, you’ll likely get better rates and lower fees. You’ll also probably get a better app and online experience. On the flip side, you’ll likely get less real life, human support and won’t have a local branch to pop into. Regulatory kinks are also still being worked out, so there’s a slight chance of another snafu.
- 💰 Know Before You Go - Thinking of going with a fintech bank? Before you do, make sure they carry FDIC insurance and see if they offer even more. For example, SoFi provides $2 million through their own FDIC Insurance Network. Also, don’t forget to check out the bank’s security features and customer ratings and reviews.
🔥Bottom line: While most of today’s fintech banks are safe bets, don’t transfer your money until you’ve done your research. Make sure the bank you’re considering checks all the safety boxes first. If you’re getting your finances ready for 2025, check out these tips to make sure you finish out the year on a high note!
Is your money with a fintech bank?
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