Jeffrey Wade
Formerly known as Square Cash, Cash App is a digital wallet for American consumers that allows users to send, receive, or save money, access a debit card, and invest in stocks or bitcoin. As of 2024, Cash App has 57 million users and $283 billion in annual inflows. Cash App offers a 4.5% annual percentage yield (APY) on savings, and balances stored on the Cash App Card are insured through Wells Fargo Bank for up to $250,000 per person. Square Checking is provided by Sutton Bank, a member of the Federal Deposit Insurance Corporation (FDIC), and offers FDIC-insured business checking accounts with no waiting period for funds deposited through Square sales. The Square Savings deposit sweep program distributes funds among multiple FDIC-insured partner banks, providing eligible savings deposits with FDIC insurance coverage of up to $2.5 million.
| Characteristics | Values |
|---|---|
| Name | Cash App (formerly Square Cash) |
| Type | Digital wallet |
| Services | Send, receive, save money, access a debit card, invest in stocks or bitcoin, apply for personal loans, file taxes |
| Annual percentage yield (APY) on savings | 4.5% |
| Conditions for APY | Account must be set up to receive a monthly direct deposit of at least $300 |
| Insurance provider | FDIC-insured through Wells Fargo Bank |
| Insurance limit | Up to $250,000 per person |
| Additional insurance | Savings deposits distributed among multiple FDIC-insured partner banks, providing coverage of up to $2.5 million |
| Withdrawing funds | Free to a third-party bank account within five business days, or instant transfer for a 1.5% fee |
| ATM withdrawal fee | $2 fee if no direct deposit account with the app |
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What You'll Learn
Cash App/Square Cash history and insurance
Cash App, formerly known as Square Cash, is a digital wallet service for consumers in the United States. Launched by Block, Inc. in 2013, it initially served as a person-to-person money transfer service. Over time, Square Cash expanded its features to include transactions with businesses, debit cards, savings accounts, bitcoin and stock investing, tax filing, and personal loans. The service was subsequently rebranded as Cash App.
As of 2024, Cash App has 57 million users and $283 billion in annual inflows, making it one of the most popular peer-to-peer payment platforms. It is particularly favoured by lower-income adults and is the preferred payment app among this demographic in the United States. The app is free to download and offers free standard transfers, although there are fees for instant transfers and credit card usage.
Cash App provides users with a range of financial services. It allows users to send, receive, and save money, access a debit card, invest in stocks or bitcoin, apply for loans, and file taxes. Additionally, Cash App introduced Paper Money Deposits, enabling users to deposit cash at participating retailers for a fee. The app also offers an annual percentage yield (APY) on savings accounts with a monthly direct deposit requirement.
In terms of insurance, Cash App's partner bank, Wells Fargo, provides FDIC insurance for balances stored on the Cash App Card, up to $250,000 per person. This insurance coverage helps protect users' funds in the event of bank failure or other insured events. Additionally, Square Financial Services, Inc., the company behind Cash App, has applied for deposit insurance with the FDIC, indicating that they are taking steps to ensure the security of their customers' deposits.
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FDIC insurance coverage
FDIC deposit insurance protects your money in the event of a bank failure. FDIC insurance covers depositors' accounts at each insured bank, including principal and any accrued interest through the date of the insured bank's failure, up to the insurance limit. FDIC deposit insurance covers all types of deposits held at an insured bank. This includes deposits in a checking account, negotiable order of withdrawal (NOW) account, savings account, money market deposit account (MMDA), certificate of deposit (CD) or other time deposit account, as well as official items issued by an insured bank such as a cashier's check or money order. Each depositor is insured to at least $250,000 per insured bank.
FDIC insurance covers various types of banking products. However, it does not insure money invested in stocks, bonds, mutual funds, life insurance policies, annuities or municipal securities, even if these investments are purchased at an insured bank. Non-bank companies are never FDIC-insured. Even if they partner with insured banks, money sent to a non-bank company is not FDIC-insured unless and until the company deposits it in an insured bank.
FDIC deposit insurance is backed by the full faith and credit of the United States Government. Since the start of FDIC insurance in 1934, no depositor has lost a single cent of insured deposit. The FDIC provides resources to help bankers provide depositors with accurate information on deposit insurance. You can also call the FDIC at 1-877-275-3342 or 1-877-ASK-FDIC to determine your deposit insurance coverage or ask any other specific deposit insurance questions.
Square Financial Services, Inc. offers a savings account product that provides FDIC insurance coverage of up to $2.5 million. The Square Savings deposit sweep program distributes your funds among multiple FDIC-insured partner banks.
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Square Savings deposit sweep program
Sweep accounts are a typical business tool, especially for small businesses that rely on daily cash flow but want to maximise earning potential on sitting cash reserves. The Square Savings deposit sweep program distributes your funds among multiple FDIC-insured partner banks, meaning your eligible savings deposits have an FDIC insurance coverage of up to $2.5 million.
The program works by providing customers with the greatest amount of interest with minimal personal intervention by transferring money at the end of the day into a high-interest account. Sweep accounts were needed historically because federal banking regulations prohibited interest on checking accounts.
Brokerages typically use sweep accounts for individual investors to park money waiting to be reinvested, such as dividends, incoming cash deposits, and money from sell orders. These funds are typically swept into high-interest holding accounts or money market funds until an investor decides on future investments or until the broker can execute already-standing orders within the portfolio.
Square Savings helps you meet your savings goals by setting up folders and savings targets. You can also transfer funds directly into your savings account to accrue interest. There is no minimum balance to open a savings account. However, there is a minimum balance of $10 per folder required to accrue interest at the daily periodic rate. Interest is calculated daily using the account balance at the end of each business day. The interest you have earned is then added to your account at the end of each month.
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Square Financial Services, Inc
One of the key concerns for customers when using digital wallet services is the safety and security of their money. In this regard, Square Financial Services, Inc. provides assurances to its customers through its partnership with FDIC-insured banks. The Federal Deposit Insurance Corporation (FDIC) is a United States government corporation supplying deposit insurance to depositors in American commercial banks and savings banks. FDIC insurance covers customer deposits in banks and savings associations that are members of the FDIC. This insurance protects depositors' funds up to $250,000 per person in the event of a bank failure.
Additionally, Square Checking, another service provided by Square Financial Services, Inc., is also FDIC-insured. Square Checking is provided by Sutton Bank, a member of the FDIC. Funds in Square Checking accounts are eligible for FDIC insurance up to the allowable limit of $250,000. This insurance coverage ensures that customers' money is protected and accessible even in the event of bank failure.
Overall, Square Financial Services, Inc. prioritizes the security and protection of its customers' funds. By partnering with FDIC-insured banks and providing deposit sweep programs, the company ensures that customers' money is insured and protected from potential bank failures. This commitment to safety helps build trust and confidence in the company's financial services and products.
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Cash App Card insurance
Cash App is a financial services platform and not an FDIC-insured bank. FDIC insurance covers the failure of an FDIC-insured depository institution. If you have a Cash App Card or a Sponsored Account, or if you sponsor one or more Sponsored Accounts, your Cash App Balance and your Savings Balance are eligible for FDIC pass-through insurance through Cash App's Program Banks, Wells Fargo Bank, N.A. and Sutton Bank, Members FDIC. FDIC insurance covers your balance only in the event that the Program Bank holding those funds fails.
Your funds are eligible to be insured up to $250,000, including principal and accrued interest, per customer when aggregated with all other deposits held in the same legal capacity in any of your other accounts at each Program Bank. If you have multiple Cash App accounts (including Sponsored Accounts), they are included under the same aggregate $250,000 limit. FDIC pass-through insurance does not cover Bitcoin or Investing holdings.
If you do not have a Cash App Card or a Sponsored Account, and if you do not sponsor a Sponsored Account, your Cash App Balance and Savings Balance are not deposit products and not eligible for FDIC pass-through insurance. If you have been issued a Cash Card, your Cash App Balance is covered by FDIC insurance through Wells Fargo Bank, N.A., Member FDIC ("pass-through insurance"). Additionally, if you sponsor one or more Family Accounts, your Cash App Balances and the Family Account's balances are covered by FDIC pass-through insurance, regardless of whether you or the Family Account has been issued a Cash Card.
Your funds will be eligible for FDIC pass-through insurance only when Cash App's Program Banks receive those funds from the third party and if certain conditions are met. This means that even when Cash App provides you with immediate or early access to the funds sent to your Cash App account, there could be a delay between the time that those funds are credited to your account and when the funds are received by the Program Banks. During that delay, your funds are not eligible for FDIC pass-through insurance if the Program Bank holding those funds fails.
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Frequently asked questions
Square Cash, now known as Cash App, is a digital wallet for American consumers. Cash App offers FDIC-insured accounts of up to $250,000 per person through Wells Fargo Bank. Additionally, Square Financial Services Inc. provides deposit insurance for savings accounts, with coverage of up to $2.5 million.
FDIC insurance is provided by the Federal Deposit Insurance Corporation, which insures deposits made at banks. Cash App partners with FDIC-insured banks, like Wells Fargo, to provide insurance coverage for eligible savings deposits.
Cash App provides protection for its users in the event of unauthorized access or fraudulent transactions. Users can file claims for up to $2500 if they experienced unauthorized access between August 23, 2018, and August 20, 2024. Additionally, Cash App has agreed to strengthen its data security measures to protect user information and funds.
