- 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.
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.
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,…