It may seem akin to an old joke about people keeping their money underneath their beds, but there are surprisingly a lot of Americans who do not keep their savings in a bank account. In fact, a lot of these American consumers would rather keep their cash at home, “in a secret location.”
This was revealed recently in a new survey from the American Express Spending and Savings Tracker, which showed that 43 percent of over 1,800 respondents keep their savings in cash. Out of those 43 percent, 53 percent said they “plan to hide (their) bills in a secret location at home.” The survey did not ask for any explanation as to why these consumers would want to hoard cash like that, but it stands to reason that there are a lot of Americans who would feel more secure if they can see their money, instead of leaving things to the vagaries of chance and stashing their money away in a bank account.
The latter hypothesis does make sense, considering how Americans seem to be becoming more distrustful of financial institutions ever since the great financial crisis of the late 2000s gutted the U.S. and many other world economies.
A separate Harris Poll from 2014 showed that about 50 percent of Americans do not trust banks as much as they used to in the past. However, a blog post from Yahoo Finance, courtesy of Business Insider, advised consumers that “avoiding the bank” is not the best course of action, unless one has some “extenuating circumstances” to deal with.
The first reason stated in the blog post is the simple belief that leaving money out in the open is not a safe practice at all. “You could be robbed, or there could be a flood, a fire, or a pest infestation that snacks on your dollars,” wrote Business Insider’s Libby Kane. “Your toddler could find it and use it for art projects, your teenager could siphon it for Friday night expenses, or someone working in your home could find it just too tempting to leave alone.”
Conversely, money kept in accounts of Federal Insurance Deposit Corporation-insured banks comes with insurance for up to $250,000 per person, making it safer than one thinks to keep money in a bank account.
Kane also stated that money that is not kept in a bank account does not grow and, in fact, “loses value as it sits there.” Even if interest rates can go below 1 percent on numerous occasions, a little money earned through interest is better than none at all. Kane suggested that consumers can invest in “even the most conservative mutual funds” and make use of other tools to ensure that their savings grow over time, adding that keeping money under the mattress or anywhere else in the house “is the quickest way for your wealth to essentially go backwards.”
She believes that consumers will not be able to make full use of their savings in 30 years as compared to today, should they continue hoarding it and shying away from bank accounts.