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Could Withdrawing Too Much Cash Put You at Risk?

April 6, 20206 minute read

How to protect your health and wealth during COVID-19

When the unexpected strikes, people from all walks of life scramble to get the supplies they need. Whether that includes a last-minute trip to the grocery store for milk and bread or a run to the local pharmacy for hand sanitizer and soap, the desire for preparation is logical, smart and easy to understand.

What can be less easy to understand is the tendency to hoard cash in an emergency. It does make sense, of course, to have a small amount of cash on hand. You never know when you’ll need to pay for a grocery delivery or tip the person bringing essentials to your home.

Withdrawing enough cash to last two weeks or even a month can be a smart move, but emptying out your bank account and stashing the cash under the mattress could be dangerous and counterproductive. Before you head to the bank to withdraw piles of cash, here are a few reasons taking out too much cash could be a risky thing to do.

Your money is insured — if it stays where it is.

mother and daughter counting money from piggie bank

If you leave your money in a traditional bank or credit union, it is fully insured up to $250,000 per account. These insurance numbers represent a significant rise from the $100,000 per account limits in place before the 2008 recession, and they remain in place today.

Unless you have huge sums that exceed these limits, there is no reason to make a change in light of the COVID-19 crisis. As long as your bank or credit union is insured by the FDIC or NCUA, your cash is safe — at least until you take it out.

If you lose your stash, it’s gone forever.

Your money is as safe as can be in the bank or local credit union, but that safety evaporates the minute the teller hands you your bills. Once that cash has been withdrawn, protecting it becomes your responsibility, and if you fail, the money is likely gone forever.

If you misplace your cash or your wallet is lost or stolen, you can pretty much forget seeing it again. On rare occasions, a good Samaritan may find your wallet and return it with the cash inside, but relying on the kindness of strangers is risky to say the least.

Keeping a lot of cash at home could make you a target.

The risk of loss is high when you withdraw large quantities of cash, but there is an even more insidious danger. If word gets out that you’re keeping piles of cash in your home, you could find yourself a target for thieves, especially in the age of epidemics, hoarding and rising panic.

People can get desperate when grocery store shelves are empty and staples like toilet paper are in short supply. In a crisis like the one surrounding the coronavirus, keeping large quantities of cash in your home could prove quite dangerous to yourself and your family members.

Paying with cash could spread COVID-19.

Medical experts are still unsure how long the novel coronavirus lingers on common surfaces, and that unknown can increase the risk of transmission. What scientists and doctors agree on, however, is that the coronavirus can remain on porous surfaces for at least a couple of hours, and that includes the cash in your wallet or pants pocket.

Person counting cash in wallet

The fact that the coronavirus responsible for the global pandemic can linger on currency could make paying with cash risky, both for you and for the store clerks who already face significant danger just by showing up to work. Every time you pay with cash, you risk infecting the person on the other side of the transaction. This, in turn, can increase the danger of community spread, the phenomenon responsible for the exponential growth of COVID-19 cases around the world.

In addition to the dangers posed to store clerks and other workers, cash can also pose a risk to the payer. When you hand over a potentially infected $20 bill and receive your change, those bills could harbor hidden virus particles as well.

In fact, many stores and service providers are already placing restrictions on cash payments, and some are banning cash altogether. Turnpikes and toll roads in a number of states have prohibited the use of cash, requiring license plate readers and EZ-Pass systems instead. What this means is that the large stash of cash you withdraw from the bank or credit union may not be as useful as you think.

Cash doesn’t earn interest.

No matter how high or how low interest rates are, interest is money that you otherwise do not have to go out and earn. The cash in your pocket, under your mattress or in your safe doesn’t earn interest. Whatever you’re holding in cash could be in an interest-bearing account instead. Withdrawing more cash than you need means you decrease your earnings.

Now is the time to let the money you already have work for you for as long as it can. Every penny counts, especially in the face of uncertainty.

You could be risking an accidental overdraft.

A sudden decision to withdraw a large amount of cash could leave your checking account short for future withdrawals. It’s easy, especially when daily life has changed so dramatically, to forget about an upcoming automatic payment or an outstanding check. By keeping enough cash in your accounts to cover these forgotten expenses, you'll give yourself the gift of peace of mind — and avoid potential overdraft fees.

There are better options for accessing your money.

woman entering credit card information on laptop

As you can see, making a run on the bank or local credit union and withdrawing large amounts of cash is not a good idea, especially in the midst of the global COVID-19 pandemic. But you don’t have to choose between large stacks of cash and buying what you need, not when there are so many other, and much better, options available.

If you have a debit card in your wallet, you can access the cash in your account with a simple swipe. You can also use your debit or ATM card to withdraw cash as you need it, so you can enjoy the convenience of cash payments where appropriate without putting the rest of your money at risk.

You can also use electronic payment platforms like PayPal and Venmo to make purchases or reimburse friends for purchases made on your behalf. You don’t have to fill your wallet with cash to enjoy all these conveniences, so leave your money where it is if you want to keep it safe.

It’s only natural to worry about access to cash in an emergency, and the current pandemic definitely qualifies. But before you join the line at the drive-thru or contact your bank, consider the potential risks along with the supposed benefits. Cash in the bank or credit union is safe and secure, but cash in your wallet can be far riskier.


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