Do You Put Spare Cash in the Freezer?

Since the recession began several years ago, our distrust of the banks has continued to grow. Questionable practices like making sub prime loans and an ever-growing list of fees make us wonder whether the banks really have our best interests in mind. Now it’s come to this: many of us are afraid to put our savings in a bank or other financial institution.

According to a new poll, 27% of us stash our extra cash in the freezer. The freezer! This is something I had never considered before. And it goes on – 19% put their cash in the sock drawer, 11% stick it under the mattress and 10% hide it in the cookie jar.

Think about this for a second. If a burglar robbed 4 houses, statistically he or she will find cash hidden in the freezer in one of them. Their chances of finding treasure in the sock drawer or under the mattress when you’re not home are pretty good too.

Keeping large amounts of cash at home isn’t a good idea. For one, it puts you at risk of losing it in a burglary. There’s also a chance you’ll lose track of it or forget about it altogether.

I know that interest rates are puny right now. If you’re lucky you’ll earn 1% on your savings. But sitting there under your mattress, it’s not even earning that.

Most banks and credit unions are insured by the FDIC and NCUA, respectively, for deposits up to $250,000 per account. That means if the bank goes under you won’t lose your money. Even at the low interest rates we have today, your money is much safer on deposit at the bank.

That’s fine if you’ve become disillusioned by the biggest banks. There are many other options out there such regional banks, credit unions and even online banks. You’ll often get better rates and customer service at local or online banks.

Finally, if you won’t need the money for 10 years or longer, you need to think about investing it. It’s important to overcome your fear of the market, because investing is the best chance you have to fight against inflation.

What do you think about people who keep cash at home? 

Photo by showthelove.com

39 thoughts on “Do You Put Spare Cash in the Freezer?

  1. My boyfriend used to work for a tiny company that paid him in cash once in awhile which threw us off. He’d stash the cash around the house but I always reminded him that it is dangerous!

  2. This is a great point. I think a lot of the cash stashing is an older mindset / thinking stemming from growing up with more economically challenging times. However – like your stat shows – folks are still doing this. It’s also not a good idea as you might “kick the bucket” and no one will ever know about your stash! This has happened in our family – where the money wasn’t found for years later – and it’s fortunate it was even found at all. 🙂

    • Thanks, Aaron! It does seem to be common among older people doesn’t it? So many people I know in their 20s and 30s don’t even use cash on a regular basis. If you’re determined to keep cash at home, at least tell a trusted family member where it’s located so it’s not forgotten when you die.

  3. I think it’s very reminiscent of the great depression. People are terrified there will be another run on the banks and that they won’t get back what they put in. It’s a little paranoid, but it’s more unsafe than keeping it in the bank. I put my cash in more than one “basket” too so the risk of losing it all reduces in the long run. I do have a little petty cash jar for “emergencies” when bills are needed, but beyond that, everything is in the bank.

    • Hi Miss Scarlet, that’s a great idea about not keeping all your cash in one place. What people don’t realize is that our deposits up to $250K are insured by the federal government at banks with FDIC insurance (at least in the USA.) The FDIC was created in 1933 after the bank runs you mentioned, and it’s meant to give people confidence in their banks.

  4. Some cash can be kept in your “disaster box”, for when the ATM’s don’t work after the earthquake or big flood.
    However, the best part of this post is the reminder that to make no decision is to make a decision. (if you are waiting for the “best” alternative by stashing cash in your house, you will lose out to inflation.)

    • Hi Dana, you make a good point about having a small amount of cash for natural disasters. Probably a good idea – just don’t store it in the sock drawer!

      Thank you so much for your comments.

  5. Its not a bad idea however to have at least $1000 cash saved and easily accesible somewhere in the home for emergencies. not that I do that…..so dont anyone come looking 🙂

    • Haha, I hope you don’t get any unwanted visitors! I think a grand is too much to keep at home personally, but if that’s what you feel you need go for it. Just don’t keep it in the freezer!

  6. I would never leave a ton of cash at home, especially where I live right now. I agree with the sentiment that banks don’t have their customers’ best interest at heart, but as a customer at least I know my money is insured.

  7. Great post. We are definitely part of the new era where we invest this money. Between our RRSP accounts and our TFSA we have lots of options. It is an old mindset but that is because banks weren’t what they are now. Plus people are just that much more mobile to even get to a bank.

    • Thanks, Miss T! It does seem that more options open up each year. I’m especially a fan of the low-cost brokerage firms like Schwab and T Rowe Price that offer very inexpensive options for retirement savings. For shorter term savings goals I like community banks and credit unions.

  8. I think it’s pretty silly to stash your cash in the freezer. Though I do have a relative that pulled all his money out of stocks, bought gold, and has it buried somewhere in his backyard. Bank deposits are insured to $250,000 per person per bank. And in the history if the FDIC no depositor has ever lost a penny of their insured deposits.

    • Hey Justin, that’s a really good point about no depositor losing money. The whole point of the FDIC is to decrease bank runs and make people more confident in the banks.

      I can’t believe your relative put all his money in gold. The price of gold is so volatile. Historically, the price is a bit high right now. The time to buy would have been years ago when stocks were doing great. Then, nobody wanted gold so the prices were quite low. If that’s what he did, he’s probably laughing at all of us!

  9. I have to admit, when the market started falling I freaked out and withdrew all my money out of my bank account. I know…crazy, silly femmefrugality. I don’t do this any more, but I don’t look down on people who do. Thank god for the FDIC.

    • I don’t think your situation is all that unusual. When markets tank people get scared. The big banks did a lot to cause this recession, so people are right not to trust them. However, I have full faith in the US government. Like you say, thank goodness for FDIC!

  10. One of my coworkers, claims that he buries his money in his backyard. He says that he doesn’t trust banks and won’t start a retirement account. I have had a hell of a time trying to explain to him what inflation is. But who buries their money? I don’t really believe that he does this, but what if he did? He would have to dig in the same spot every time he wanted to add to his savings. Insanity.

    • Haha, good point! I see a trend developing here…Justin’s relative buries gold in the backyard, your coworker buries cash there. Should I add backyard to the places people shouldn’t stash their cash?!

      Seriously though, we might not trust banks and brokerage companies, but we need to get over our fears and take smart risks with our money. This is the only way to grow our assets.

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  12. Well said. It’s a very odd situation we find ourselves in when so many people are using their freezer to stash their money, but its a throwback to old fashioned thinking. Here in the UK we have a system where you can save upto £6k per financial year, that won’t be taxed and will typically earn interest above the rate of inflation, overall deposits are guaranteed to £85k, and yet we still see many pulling their money out of banks and into similarly odd places like under the bed. I blame the media for fear-mongering

    • Thanks, Abbott! That sounds like a great system you have over there. You point out what I’ve seen others say – that this phenomenon seems to be a throwback to the Great Depression. Times now aren’t quite as bad for as many people as they were then, but the general feeling of panic still persists. You can’t blame the Average Joe for not trusting banks – look what they’ve caused!

  13. I would never store cash at home. Although interest rates are less-than-stellar, I currently keep my money in a high-yield savings account because I may need to withdraw it in the near future at any time.

    • Keeping your cash in a high-yield savings account is a smart thing to do. If you need the money within the next 5 years there’s not much else you can realistically do with it.

      • Yeah, it’s true. I feel like I had read somewhere that certain CDs, if you have enough money in them, can generate enough interest income to compensate the fees you would have from breaking from the term agreement but I’m not sure.

        • That’s very possible. I had a CD once that I cashed in early, and the only penalty was 90 days of interest. Not a big deal if it’s an emergency, but that’s what makes simple savings accounts great. No fees to take out your money!

    • It is weird, isn’t it?! It’s funny because what you’re saying is the opposite of what I’ve heard others say. Most people trust themselves more than the banks with their money, but you’re the opposite. I doubt our banks in the US are as regulated as yours there, but I think we’re making progress with financial reforms.

      • Nope, not nearly as regulated. From what I understand you have more checks and balances, but our government generally doesn’t need to hover over the banks to make sure they’re doing things properly and none of them received a bailout. Canada has a mixed market rather than the free market system you have in the States. As far as our banks, we have five big banks, some scattered online banks and credit unions, and that’s about it. It’s really hard to get into the industry up here- the biggest 6 hold 90% of all commercial banking. I really hope the US continues to impose regulations to insure that a recession of this magnitude doesn’t happen again, and although our economic structure isn’t the same, its still worth a look to see if there’s anything that could be adopted in the States. Only one big bank here has ever failed and that was in 1923. We have stricter mortgage laws (which is a big part of what got you guys into so much trouble), and borrowing isn’t a tax incentive (mortgage interest isn’t deductible).Canadian banks have actually been named the soundest in the world four years in a row. Not everyone up here would agree with me, but I trust Canadian banks and our economy completely. That might have something to do with the fact that our Minister of Finance is both the Member of Parliament for my city and a genius in my opinion, but I digress 🙂

        • Wow, thank you so much for your comments! I’m learned more from you just now about banking in Canada than I’ve learned in my entire lifetime.

          I agree that what we need are regulations on what the banks can and can’t do with their money. They shouldn’t be allowed to hand out subprime loans to people who can’t repay, and they certainly shouldn’t be allowed to put money in ultra-risky investments. What’s happening now is that the biggest banks here have every incentive to take these risky bets because they know the government (and ultimately the American taxpayer) will be there to back them up.

          You are absolutely right that we have a lot to learn from the Canadian banking system. Some people here are so opposed to regulations and government intervention that I’m not sure a system like you have would work here.

  14. I can’t tell you how many older clients I had that would keep cash at home. One of them was robbed at gunpoint by someone who seemed to know EXACTLY where the cash was….it was probably a family friend or family member (sadly).

    • It’s sad that so many older people put themselves at risk by keeping cash at home. I’m fully convinced that most robberies and ID thefts happen by people we know, which makes you wonder who you really can trust.

  15. If burglars didn’t check the freezer for money – they will now. I always like having a bit of cash around anyway, but once it gets to around £100, I take it to the bank. The more you leave it lying around, the more inclined you’ll be to spend it.

    • Hey, Daniel! Sorry for taking another hiding spot off the table. 🙂 You’re right that money lying around is tempting to spend. When I have cash in my wallet I always think of the old expression “it’s burning a hole in my pocket!” and get a good laugh out of it.

      In addition to spending it, there’s a chance you may lose it.

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