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