Consumers are withdrawing hoards of cash from ATMs, but stockpiling dollar bills is riskier than keeping them in the bank.
Toilet paper is not the only paper product that Americans are stockpiling. Paper money is also in great demand.
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.
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.
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.
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.
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.
Last modified: September 23, 2020 1:46 PM