When it comes to managing your finances, smartphones have revolutionized the game. From budgeting tools to investment platforms, there seems to be an app for just about everything. But not all of them are worth your time or money. The reality is that some financial apps, despite their glossy marketing, deliver more frustration than value. Worse yet, some can even cost you money instead of saving it.

If you’ve been wondering which financial apps you can trust, or how to spot the ones to avoid, you’re in the right place. Below, we’ll untangle the common traps some financial apps present and offer practical tips to steer clear of rip-offs.

Spotting the Red Flags in Financial Apps

Not all financial apps are created equal, and unfortunately, some rely on misleading practices to draw in unsuspecting users. Keep an eye out for these red flags:

1. Hidden Fees

Some apps seem free to use but slip in hidden fees that can drain your bank account over time. Subscription-based apps, for example, might lure you in with a free trial but start charging a hefty monthly fee if you forget to cancel. Other apps might tack on transaction fees or charge for basic features that similar apps offer for free.

For instance, be wary of investment apps that require a high percentage of your earnings each time you invest or withdraw money. Over time, those fees can erode any gains you make.

2. Overhyped Claims

“Save $500 in the next month!” or “Double your money in a few weeks!” Apps that make sweeping promises like this should definitely raise your eyebrows. While some tools can help you automate savings or track spending effectively, no app can work miracles or guarantee financial success. Any app promising quick riches should be approached with extreme caution.

3. Pay-to-Play Features

Some apps claim to offer premium financial advice but charge users expensive add-ons for accessing standard tools like planning or goal-tracking features. The basic, no-cost version might provide little value, forcing you to fork over money to unlock features that other apps provide for free.

4. Poor Security

When using a financial app, you’re often entering sensitive data like your bank information, credit card details, or even your Social Security number. If the app doesn’t follow industry-standard security measures like encryption or two-factor authentication, your personal information could be at risk.

Apps with shady privacy policies or permissions that seem unrelated to their service (e.g., requesting access to your location, contacts, or camera for no reason) should also be a major red flag.

5. Bad Reviews and Questionable Developers

Always look up reviews before downloading a financial app. If you see feedback consistently complaining about surprise charges, errors, or poor customer service, it’s best to steer clear. Similarly, if you notice that the app developer is obscure, with no history or information available online, that’s a signal to proceed with caution.

Examples of Questionable Financial Practices

To make this all more concrete, here are a few common ways financial apps have come under fire for shady practices:

Subscription Scams

Many financial apps rely on subscription-based revenue, which in itself isn’t a bad thing. However, some use deceptive practices by making it easy to sign up but nearly impossible to cancel. For example, users may be required to call customer support (instead of canceling directly through the app)—only to face endless delays.

High Fees for Basic Functions

Some trading and investing apps market themselves as “beginner-friendly” platforms but then hit users with steep withdrawal fees, inactivity fees, or higher-than-average commission rates for trades.

Pseudo-Budgeting Apps

Certain apps claim to help you save or stick to a budget, but instead, they upsell unnecessary features or partner with credit companies to push products like high-interest loans or credit cards. These so-called “helpful tools” can wind up doing more harm than good.

Untrustworthy Security Practices

There have also been cases of financial apps being hacked or leaking sensitive user information due to poor cybersecurity standards. If an app doesn’t prioritize your privacy and security, it’s a serious risk.

How to Choose Trustworthy Financial Apps

Now that you know the risks, here are some steps to help you select financial apps that are reliable and worth your time:

1. Do Your Research

Before downloading an app, check its ratings and read recent user reviews on platforms like the Apple App Store or Google Play Store. Reviews can clue you into hidden fees, functionality issues, or security risks.

2. Look for Transparency

Reputable apps are upfront about any fees, subscriptions, or terms of service. If you have to dig to figure out the pricing, that’s a sign to look elsewhere. Transparent companies won’t hide their costs in the fine print.

3. Check Security Features

Verify that the app uses encryption to protect your data and offers features like two-factor authentication. Review their privacy policy to understand how your personal information will be used, stored, and shared.

4. Stick to Well-Known Brands

While newer apps aren’t necessarily bad, established brands often have more credibility and a track record of good service. Apps like Mint, You Need a Budget (YNAB), and Acorns are trusted by many users for their transparency and reliability.

5. Trial the App Before Committing

Many apps offer free trials or a no-cost basic version. Take advantage of these to see if the app truly delivers on its promises before paying for premium features. If the free version feels pointless, that’s a sign it might not be worth upgrading.

6. Avoid Too-Good-to-Be-True Promises

If an app claims it can help you get rich quick or save enormous sums with little effort, it’s likely too good to be true. Effective financial apps require consistent effort and realistic expectations.

Take Control of Your Financial Journey

The rise of financial apps has made managing money more convenient than ever, but it’s also created plenty of opportunities for exploitation. By being cautious, researching thoroughly, and staying aware of red flags, you can avoid falling into the trap of rip-off apps.