So I linked a checking account to PayPal. I heard that it was important to not link it too strongly to all my funds, so the account was a brand new one created online. However, it seems that despite me not requesting an overdraft link to my main savings account, the two are still linked simply by virtue of me owning both.
How much of a problem is this? Enough to go to the trouble of asking my credit union to sever the two (if that’s even possible)?
Wife and I have a checking account that is central to our daily financial life; our payroll deposits go there, and our bills get paid from it. Not putting a number on it, but at any given time it contains a substantial balance. If that account gets compromised, it becomes a major pain in the ass to move our financial life to a new account, so I am loathe to put that account at any more risk than is necessary.
I use PayPal for maybe half of the transactions associated with my side business (the rest is by personal check), so I move a few thousand dollars through my PayPal account every month. I don’t trust PayPal; they have a history of freezing accounts for sometimes unclear or seemingly arbitrary reasons. This leads me to maintain a few policies to limit financial risk:
[ul][li]My PayPal account is not linked to our primary checking account. Instead, I link it to a savings account at a different bank. [/li]
[li]I keep the balance in my PayPal account low; I withdraw funds if it gets over $1000, and dump it in the aforementioned savings account. If PayPal locks my account for any reason, there won’t be much money locked up.[/li]
[li]I keep the balance in that savings account low; if it gets to more than a few thousand dollars, I do an ACH transfer to our primary checking account. If PayPal tries to grab money from the savings account, there won’t be a lot to grab.[/li]
[*]I don’t link my PayPal account to a credit card.[/ul]
I’ve been a paypal user for over 15 years. Never had one single problem.
I think the problem is not Paypal-The problem is the bank’s linking of the two accounts.
Ditto what Omar Little said.
Same here. I’ve not had any reason for concern with the linking of my credit union checking account to my PayPal.
My bank account has been linked with my paypal account for the entire 15 year period. No problems.
I review my bank account activity about twice a month. Never found a fraudulent transaction over the last 40 years.
Again, I don’t think the problem in the OP is the linking of the account to PayPal-the problem is the credit union linking other accounts to the account that was initially linked to PayPal without asking/authorization.
How many accounts do you have at that bank? The problem here involves the linking of multiple accounts without authorization. If it helps to understand, substitute any other business instead of PayPal, because I don’t think the problem is at that end.
OP is concerned that if Paypal were to withdraw funds from his paypal linked account, and thus created an overdraft in that linked account, that his credit union would cover that overdraft with funds from his other accounts, not that his other account is linked to paypal.
My response was to indicate that I don’t think there is much to worry about, as with all of my experience, I’ve never seen a fraudulent transaction originated by paypal.
Omar: Haven’t you read lots and lots of posts about identity theft? While I also have both 1. Paypal linked to my main account and 2. Never had a problem because of this; it certainly is a reasonable concern.
I have paypal linked to my home account for my ebay business. Never had my account locked but I had had a very few paypal transactions put in limbo there the payer was using a sketchy account or they filed a dispute. Most of my individual transactions are less than 200 and the majority less than 100 so it’s not like one deal could bleed my dry plus my home account has relatively modest balance most of the time because it services the ebay store and is constantly used to pay out shipping and bills. Paypal generally been rock solid and it should be at the transaction rates they charge.
Just tell the bank you don’t want overdraft protection on your checking account? I’m pretty sure you could set up alerts to tell you if your balance is getting low.
The term for a bank using money from one account to pay off debt to another is called “Setting Off” and, according to this article, they don’t need your permission to do it.
Why yes, but I’m not going to live my life in a hole. As I said, I review my bank accounts about twice a month. Which is well enough in the time frame that if I discover fraudulent activity, that my bank will bear the cost of.
AND, furthermore, this is absolutely standard practice at all banks, AFAIK. Have multiple accounts of any sort at one bank? Then they are linked (within that bank) such that ANY debt, dispute, or claim against any of your accounts can be satisfied by yanking money from any of your other accounts. Banks may do this as a first resort to settle any disputes, only asking questions later (if at all). If you disagree, it will be up to you to fight to get your money back.
The solution?
As suggested by several posters above, and in greatest detail by Machine Elf: Put your many accounts at separate institutions !
ETA: And also, as suggested above, have your automatic payments and transactions linked to only one of those accounts, and carefully keep a minimal balance there.
That’s a bit different, Czarcasm, at least in the US (where it’s called “right of offset”). The bank can take money from any account on which you are an owner to pay a debt owed to that bank from any other account on which you are an owner, but the bank cannot pay a check written one account with money from another of your accounts without your prior permission. To follow that through, though, if the bank does overdraw your account to pay a check and you do not pay the bank back the overdraft and fees, that creates a debt which the bank can collect from any of your other accounts.
Right of offset in the US extends to some loans, but not credit card debit. Apparently, if I read your link correctly, that is different in the UK.
And all of this applies to legitimate transactions. If you can demonstrate that it is fraud within the appropriate time frame, then my bank will eat the cost and pursue the matter for their own account.
That’s actually what I had before, but then I decided to move my money out of my bank to the credit union, precisely because of no fees for small balances. That’s why I posted this: to find out if it was worth the hassle to call the credit union or go to yet another credit union just for a PayPal linked account that I won’t use all that often.
So I guess the question becomes: if the reported worst happens, and PayPal institutes a freeze of some kind, will it freeze JUST that checking account, or ALL the accounts linked to it as well? Because fraud, as noted by someone in this thread, can at least be handled, so that’s the scenario that concerns me.