One of the distinct advantages that traditional banks have over services like Paypal and Google Wallet is the fact monies deposited into those banks is FDIC (Federal Deposit Insurance Corporation ) insured. When you deposit or keep monies in a bank they are required to hold FDIC insurance which protects the user (up to $250,000) if that institution goes belly up. The good news for Google Wallet users is, soon Google Wallet will be FDIC insured meaning whatever money you have in Google Wallet will be protected.
Services like Paypal and Google Wallet are usually used to move money from one person to another but there are cases where some people do keep a balance in these services. These services are considered non-banking entities so they don’t fall under the FDIC umbrella. But since Google will now be holding Wallet balances in certified FDIC financial institutions, those monies will be covered by FDIC insurance.
As of now, Google Wallet’s user agreement says balances are not FDIC-insured. However, a Google spokesperson confirmed in a statement to Yahoo Finance that its current policy has changed. The company will hold Wallet balances in multiple banking institutions that are FDIC-insured, which means if anything were to happen to the company, users funds’ would be protected. The spokesperson did not provide any further details or say when the company would update its user agreement.
There’s no doubt that services like Paypal and Wallet are useful but keeping large amounts of funds in them is probably not the best idea. With Google now keeping those funds in FDIC insured institutions, that at least protects your cash with them, but other similar services will continue to be a use at your own risk. Head over to the source link to read some more in depth analysis of non-banking services. What do you think of Google Wallet insuring your money with FDIC? Let us know in the comments below or on Google+, Facebook, and Twitter.Source: Yahoo