Paypal FDIC Insured ??

by dvduval 26 replies
With all the alarm lately with the markets, I wanted to find out if my money in Paypal is safe. It is FDIC insured? Is it safe to keep a balance there right now?
#main internet marketing discussion forum #fdic #insured #paypal
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  • Profile picture of the author Michael Dominic
    Originally Posted by dvduval View Post

    With all the alarm lately with the markets, I wanted to find out if my money in Paypal is safe. It is FDIC insured? Is it safe to keep a balance there right now?
    I always recommend against keeping high balances in your Paypal account. They have "FDIC Pass-Through Insurance". I believe this means that their money is FDIC insured at their banks which also covers your balance with them. Your money is fairly safe.

    Having a Money Market account on the other hand involves some risk. It could lose value. You could lose your money. Paypal Money Market accounts are not FDIC insured

    Again, don't keep high balances. Only keep the funds that you need in there.
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  • Profile picture of the author LB
    Paypal is not a bank, however Paypal's funds are held in FDIC insured banks.

    However, to my knowledge the limit is 100,000 per account insured and I'm guessing they have more than that in their accounts.

    So in short, the money is not directly FDIC insured. If it's in a money market account then it's definitely not insured.
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    • Profile picture of the author seasoned
      Originally Posted by LB View Post

      Paypal is not a bank, however Paypal's funds are held in FDIC insured banks.

      However, to my knowledge the limit is 100,000 per account insured and I'm guessing they have more than that in their accounts.

      So in short, the money is not directly FDIC insured. If it's in a money market account then it's definitely not insured.
      You are probably right. I don't know if it is true now, but SOME agencies at least USED to have supplementary insurance of 2 million USD. In any event, paypal has had about as many "runs" as they are likely to ever have. So they THEMSELVES are probably safe. It is the MAIN bank you have to be worried about. I IMAGINE that is Wells Fargo.(Given that paypal pro uses it) Jim cramer gives it a BUY!!!!!! They started in 1852.

      STEVE
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  • Profile picture of the author dvduval
    Thanks for your feedback. I have decided to keep a little less in paypal and open up one more bank account elsewhere so that I am a little more diversified.
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  • Profile picture of the author Chris_Willow
    Michael's suggestion is great. You can never know when paypal decides to block your account at take your money with it...
    They have their policies (totally wrong)

    Chris
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  • Profile picture of the author dvduval
    I've had really good luck with paypal, and have never had a problem with getting my account frozen in the few years I have used them. In some ways, paypal is different than a bank in that they are not loaning out the money, and may be more secure in some ways. That said, I am still going to make sure I don't have to many eggs in their basket.
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  • Profile picture of the author pingshepherd
    Banned
    I have wondered the same thing, thats good to know
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  • Profile picture of the author Josh Anderson
    Never leave any money in a paypal account. Empty your paypal account regularly.

    They are not a bank and do not carry the same insurance as a bank.
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  • Profile picture of the author ahuddy
    I believe bank accounts are now insured for up to 250k no longer just 100k.

    FDIC: FIL-102-2008: FDIC Deposit Insurance Coverage
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  • Profile picture of the author oortcloud
    I agree, I sweep daily to a bank account.

    Let me ask you this, why would one want to leave money in their paypal account ? Do you not have a bank account or are you trying to keep money out of your regular bank account for various reasons ?
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  • Profile picture of the author dvduval
    The interest rate in paypal is so poor that I sweep my account out too. I especially clear the account before making a purchase with paypal, because then I can use a cashback credit card as well.
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    • Profile picture of the author Jeff Henshaw
      I believe bank accounts are now insured for up to 250k no longer just 100k.
      They might be, but bear in mind (as already posted) that PayPal, which is what the op is posting about, is not a bank. So the same rules do not apply.

      Jeff.
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  • Profile picture of the author mad.hat
    There really is no advantage to keeping money in your paypal account unless you get their debit card which I don't have. Just send funds to your bank and make purchases online with your cards.
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    • Profile picture of the author Tina Golden
      Emptying your PayPal daily is a great way to keep on their red flag list so keep that in mind.

      Tina
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  • Profile picture of the author paulie888
    They are definitely not a bank, and therefore not FDIC insured. However, constantly emptying out your Paypal account is going to throw up a lot of red flags, and could get your account frozen. I'd suggest leaving some money there, and spending what you can via your Paypal debit card.
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  • Profile picture of the author aiza.bb
    YOU can trust PAYPAL and it is really a good site, they offer a good and high quality performance in securing your money. The FDIC-insured Bank quoted "As of June 30, 2008, your PayPal U.S. Dollar balances are held at the following institutions: Bank of America, N.A., Citibank, N.A., HSBC Bank USA, N.A., RBS Citizens Bank, N.A. and Wells Fargo Bank, N.A."
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    • Profile picture of the author paulie888
      Originally Posted by aiza.bb View Post

      YOU can trust PAYPAL and it is really a good site, they offer a good and high quality performance in securing your money. The FDIC-insured Bank quoted "As of June 30, 2008, your PayPal U.S. Dollar balances are held at the following institutions: Bank of America, N.A., Citibank, N.A., HSBC Bank USA, N.A., RBS Citizens Bank, N.A. and Wells Fargo Bank, N.A."
      The Paypal bank accounts are FDIC insured, but your Paypal account isn't. These are two separate things.
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  • Profile picture of the author multimastery
    So If I have a PayPal debit card connected with my PayPal account, then does this mean my funds are FDIC-Insured? I read this term on their website and it sounds like it is insured by Bancorp: "Upon activation of your card, your funds are FDIC insured up to the current coverage limit. The Bancorp Bank; Member FDIC."
    PayPal Prepaid Debit Card:
    https://www.paypal-prepaid.com/prepa...ard/applyNow.m

    PayPal Debit Card: (Also backed by Bankcorp: Member FDIC)
    https://cms.paypal.com/us/cgi-bin/?c...DebitCard_full
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    • Profile picture of the author Kay King
      I don't agree that emptying your account at Paypal is a red flag - I think it depends on what business you are conducting online.

      I've always moved Paypal money to a bank account - no problem in doing that. If you are selling on ebay or have regular refund requests, you have to keep a balance but it's not true of all business models.

      Some people try to use Paypal as a "float" - they take their money out of Paypal but don't have enough in the attached bank account to handle any transactions. They end up with a negative PP balance - and that's not good.
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    • Profile picture of the author KirkMcD
      Originally Posted by multimastery View Post

      So If I have a PayPal debit card connected with my PayPal account
      Is there a good reason why you resurrected a thread that hasn't had any comments in 3 years?
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      • Profile picture of the author multimastery
        Originally Posted by KirkMcD View Post

        Is there a good reason why you resurrected a thread that hasn't had any comments in 3 years?
        Well everyone always says to do a search first before starting a new thread on the same topic, so that's what I did. Guess I didn't know I had to answer to you first tho.
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  • Profile picture of the author kindsvater
    Not sure what the alarm is - markets are at record highs - or what that has to do with PayPal security. If there is a problem with the account it is easy enough for you to sue eBay.

    The biggest risk to your funds is PayPal itself. Just because you have not had a problem so far has little to no bearing on what may happen next month. I sweep money out almost daily leaving a small balance.
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    • Profile picture of the author seasoned
      Originally Posted by kindsvater View Post

      Not sure what the alarm is - markets are at record highs - or what that has to do with PayPal security. If there is a problem with the account it is easy enough for you to sue eBay.

      The biggest risk to your funds is PayPal itself. Just because you have not had a problem so far has little to no bearing on what may happen next month. I sweep money out almost daily leaving a small balance.
      What does the price of stock have to do with ability to sue? There have been companies with stock at $5 that had TONS of money, and ones that had stock at well over $100 that were BROKE!

      The way stock works, a company has an offering and much of the stock is sold. If it were 100,000 shares, ipoing at $10 and the secondary market saw the price of the stock go to $1,000 a share($100 MILLION total), their income is LESS than $1 million, because part of that goes to the bankers. They may even hold back shares for early employees to cut expenses.

      GRANTED, they may hold back some other shares, but those can only be sold so fast, and might not be sellable for some time. The bank may have imposed restrictions.

      Steve
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  • Profile picture of the author +newportone
    My advice is to keep the absolute lowest possible amount in PP at all times.
    PP is famous for "freezing accounts" in order to do some investigating.
    PP is not a bank and not subject to banking laws.
    Want to read some horror stories
    PayPal Complaints, PayPal Customer Service & eBay Suspension Complaints
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