Stupid question...Paypal or bank account?

[CMIZ5290]

This I know will seem stupid to a lot of guys, but most of us on this Board do payments by Paypal friends. From a safety standpoint, are you OK leaving large amounts of money in Paypal, or should they be immediately transferred to your bank account?

[tcalca24]

Define large amounts of money? $2.88 million in case a 52 Mantle comes up for auction is too much in my opinion. There is no reason to keep the money there. I move anything over about $1000.

[BLongley]

My checking account is linked to my PayPal so when I send funds PayPal f/f it just automatically pulls from my checking and there are no fees. I'm sure it's safe to leave money in PayPal but I just assume not.

[brass_rat]

Not a "stupid question".

A few things to consider:

1) From a pure "safety" standpoint, as long as you are using a "strong" password, your account is probably as safe as that as your bank's online account. (Definite preference to banks that use 2-factor authentication though.) I would recommend using a password management service such as 1password (https://1password.com) to manage your passwords (don't use the same password across accounts, don't use "weak" passwords).

2) Also from a "safety" standpoint, most US customer balances in PayPal are not FDIC issued, but it seems like they are in beta testing to have some balances using pass-through FDIC insurance. (https://www.paypal.com/us/smarthelp/...verage-faq3588)

You might discount the importance of PayPal offering FDIC insurance right this minute, as it is a $100B market cap public company...but as we know, there's always some probability of things not working out the way you thought.

3) From a maximizing perspective, leaving a balance in PayPal is probably just leaving money on the table. You don't earn interest on that PayPal balance. You can connect your PayPal account to a savings account and easily transfer money into an interest bearing account. (Or connect to a checking account and then shuttle money from that checking account into a savings account. As mentioned, sending money to someone else via PayPal will directly draw from that connected account, so you need not leave a balance in PayPal in order to immediately pay someone.) If you are holding cash assets, then you should probably be earning at least 1.85% interest on that balance (as of 9/5) if you're talking about a savings or money market account. (Yeah, there's a wide range, but google it, but there are many FDIC-insured accounts that provide competitive rates.)

As always, do your own research and fact-check me...don't just blindly trust me.

Cheers,
Steve

[Jobu]

One other thing to consider: if someone gains access to your Paypal account and you have it linked to your bank, they can probably pay people/transfer money directly from your bank account. I do not know where something like that would fall in terms of FDIC, but I wouldn't link Paypal to a bank account with your entire nest egg in it.

[brass_rat]

Originally Posted by Jobu

One other thing to consider: if someone gains access to your Paypal account and you have it linked to your bank, they can probably pay people/transfer money directly from your bank account. I do not know where something like that would fall in terms of FDIC, but I wouldn't link Paypal to a bank account with your entire nest egg in it.

"Eggcellent" point.

[Dewey]

I don't have the huevos to link paypal to my bank account.

[bnorth]

Originally Posted by Jobu

One other thing to consider: if someone gains access to your Paypal account and you have it linked to your bank, they can probably pay people/transfer money directly from your bank account. I do not know where something like that would fall in terms of FDIC, but I wouldn't link Paypal to a bank account with your entire nest egg in it.

A few years ago we had our bank account that was linked to our PayPal account hacked and they got around $3000.

We got really lucky and noticed it within a couple hours of them doing it and got our $ back.

We sill use the same set up but keep the account with little to nothing in it and transfer $ into it only when we need to.

[rats60]

Originally Posted by Jobu

One other thing to consider: if someone gains access to your Paypal account and you have it linked to your bank, they can probably pay people/transfer money directly from your bank account. I do not know where something like that would fall in terms of FDIC, but I wouldn't link Paypal to a bank account with your entire nest egg in it.

Exactly what I do. I transfer PayPal to a bank account when I get over 100 in it. I have a second account where I keep most of my money and transfer back and forth as needed.

[hcv123]

I know people who have had their accounts "locked" due to a buyer dispute. Yep. Couldn't touch their paypal account until it was resolved. Haven't heard about a situation like that in a while, but....... I usually keep up to a couple k in there. Bank account linked - careful with my passwords.

[toledo_mudhen]

Originally Posted by hcv123

I know people who have had their accounts "locked" due to a buyer dispute. Yep. Couldn't touch their paypal account until it was resolved. Haven't heard about a situation like that in a while, but....... I usually keep up to a couple k in there. Bank account linked - careful with my passwords.

At one point I had my eBay account set to automatically pull from my PP account (no password required) which automatically pulled from my Bank Account.... so you can guess what happened next...


My eBay account got hacked and someone tried to buy a 1 ounce gold bar and have it auto paid from my PP Account.



For all of it's faults eBay - eBay was vigilant enough to stop the transaction and lock my eBay Account because the buyer tried to change the Ship To Address - Kudos to eBay


SO rude awakening for me - spent several days asking myself "WTF are doin?" - I'm an IT guy for many years - and know better - yet still happened.



Strong Passwords on both PP and Bank Account - not so much on eBay Account and there you have the weakest link.



So the bigger question is not whether you leave money in PP account - but how you have all of the stuff linked. If you have the box checked to allow eBay to automatically debit your PP account on purchases - you probably want to rethink that.


PP and Bank Account are pretty much the same thing to me (although there is a case for transferring $ back to interest bearing account)



This was a great "no cost" life lesson for me - (and you don't get many mulligans on those)

[T206Collector]

Originally Posted by hcv123

I know people who have had their accounts "locked" due to a buyer dispute. Yep. Couldn't touch their paypal account until it was resolved. Haven't heard about a situation like that in a while, but....... I usually keep up to a couple k in there. Bank account linked - careful with my passwords.

This happened to me - reason I won’t keep money there.

[bxb]

Originally Posted by T206Collector

This happened to me - reason I won’t keep money there.

+1

Paypal can lock up your money without any recourse or due process. This has happened to me as well. And during the lockout, you have no idea if the money will be removed in response to some perceived dispute.

I doubt a bank would do that.

[steve B]

Originally Posted by brass_rat

1) From a pure "safety" standpoint, as long as you are using a "strong" password, your account is probably as safe as that as your bank's online account. (Definite preference to banks that use 2-factor authentication though.) I would recommend using a password management service such as 1password (https://1password.com) to manage your passwords (don't use the same password across accounts, don't use "weak" passwords).

NO, Paypal has a security hole large enough to drive a bunch of armored cars through.


I had my email compromised, probably by some malware that captured passwords.

Paypal password changed, payments sent, Paypal said "oh no, those aren't fraudulent, they're just like the rest of your transactions" - Even though I've never randomly sent 400 to someone in … I forget where, some African country that's not one of the usual suspects.

2nd factor was them sending a text asking if the second one was ok. At 4 AM. it timed out before we got up. so 2 factor as they implement it is essentially useless.

Got the bank to reverse them, but it took about a month.


Thought we had it all fixed, different email, even stronger passwords, get it back on.

Password changed, money sent, 200 and 400 They caught one but not the other. Denied the one they didn't catch. This crew was smarter, or the same ones had learned, I never got emails telling me about the payments. I suspect they were deleted off the server before my email program could download them.




Paypal is totally unsecured, and will not help whatsoever if anything happens.


Steve Birmingham

[hcv123]

spoiler alert - you may think twice about using paypal if you follow this link:

http://www.paypalsucks.com/

I found the site years ago when I had the one of two HUGE problems with PP that I've had in the years I've been using it - they cost me $1500. I purchased a 1st issue of Playboy from a seller from I forget where. It was supposed to be shipped overnight. While the "seller" had been quite communicative up to the point I paid her, she was supposed to email tracking information which she never did. Being suspicious already, I called Paypal and asked what happens if I dispute the transaction - I was told the money is "locked" in the sellers account until the dispute is resolved. I said okay, thank you, I'll give it till the morning before I dispute it. When I had no communication by the morning (less than 12 hours after I had sent payment), I decided to play it safe and file a dispute. I did. I don't recall the timeline, but I got an email from paypal saying there was no money in the sellers account to lock - I communicated the conversation I had the night before with a paypal rep. The silence was deafening. Paypal did NOTHING to resolve this for me or get my money back - they aided a thief and communicated incorrect information to me.


Further based on my experiences and those of others I have spoken to, PP seems to have a stupid amount of control, very few rules that they are bound by and virtually no reasonable recourse if they harm you.

[Bpm0014]

I know people who have had their accounts "locked" due to a buyer dispute.

Same here. I was the victim of a scam when I sold my old iphone. He got my iphone, a partial refund, and then told paypal he never even received the iphone. This was 2 years ago and my account is still frozen. I hate paypal...

[jfkheat]

I have a Paypal debt card so when I get large payments I just use my debt card to pay bills and buy gas and groceries.

James

[Leon]

Originally Posted by jfkheat

I have a Paypal debt card so when I get large payments I just use my debt card to pay bills and buy gas and groceries.

James

Is a debt card kind of like a get out of jail free card?

I always transfer anything over approximately $100 to my bank account. No need to have PP control my money for me.

[dplath]

PayPal also offers an option to setup a security key. By activating the security key your account requires that they text you a one time password to use each time you make a payment. A little cumbersome but the extra layer of security is nice.