Are you thinking about making a run on your bank and hoarding cash? Yeah, not a good idea. | Image: Jill Battaglia/shutterstock.com
- Amid the Covid-19 pandemic, consumers are panicking and withdrawing large amounts of cash from ATMs.
- Hiding cash in your mattress isn’t a good idea, as it could get lost or stolen.
- It’s safer to keep your money in your bank account. The banking system is solid and trustworthy.
Toilet paper is not the only paper product that Americans are stockpiling. Paper money is also in great demand.
Nervous customers across the country are making more cash withdrawals, thinking having more cash on hand will protect them from the uncertainty of a coronavirus recession.
As consumers are withdrawing money at a higher rate than usual, some ATMs are running out of bills.
The New York Times reported that a bank branch in Midtown Manhattan temporarily ran out of $100 bills as the demand was so high. We’re also seeing grocery stores restricting or ending cash transactions. Some bank branches are also limiting transactions.
There’s No Rational Reason To Stockpile Cash
Withdrawing large sums of money is a primary panic reaction to any global stress. But just like stockpiling toilet paper, it isn’t rational to hoard cash. There is no indication that the banking sector is in danger of a major disruption or that the credit card networks will change because of the pandemic.
The country’s banks have entered this crisis in solid financial shape. There is no cash shortage. Banks are well-capitalized and stable. Your money is protected even if a bank goes bankrupt, as the FDIC insures deposits up to $250,000 per account.
Greg McBride, chief financial analyst at Bankrate.com, says:
Nobody has ever lost any money guaranteed that’s been protected by federal deposit insurance. I think that’s a point worth underscoring to consumers that are unsettled enough by the events going on from a health standpoint.
Stocking Up On Cash Is Risky
While storing non-perishable food can give you some security, there are risks associated with keeping up a lot of cash in your home.
The truth is, your money is safer in the bank than under your mattress. You could lose the dollars you’re hiding, or someone could steal them. Plus, you better keep money in the bank to pay your mortgage and credit card bills online.
McBride believes keeping cash is of no use during the Covid-19 pandemic:
This is not a natural disaster like a hurricane or an earthquake where the electricity is out. This is the opposite in many ways, in that, if you’re holed up at home, having a pile of cash isn’t going to do you a whole lot of good.
Handling paper money could also increase your chances of contracting or transmitting coronavirus.
A growing number of businesses and individuals around the world have stopped accepting banknotes from fear of contracting the coronavirus by handling them. Contactless methods of payment are preferred. There is no point in stockpiling cash if you can’t even use your dollar bills.
To sum up, it’s better to leave your cash in the bank and trust the banking system than keeping hoards of cash under your mattress.
Disclaimer: The opinions expressed in this article do not necessarily reflect the views of CCN.com.
This article was edited by Sam Bourgi.
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Last modified: March 27, 2020 5:29 PM UTC