Your Money During Turbulent Times

Tuesday, November 03, 2020

As economic concerns over COVID-19 continue to grow, you might find yourself wondering if a bank account is the best place to keep your cash. When you’re counting on unemployment benefits or living paycheck to paycheck in an economic crisis, knowing what to do with your money can seem daunting.

For most, a bank account is the safest place to keep your cash. There are safeguards in place that help protect your money from fraud, over-withdrawals, and even bank collapse. Read on to learn more about protecting your money in these difficult economic times, and why you should keep your money in your bank account.

Money During Turbluent Times

Is My Money Safe in the Bank?
Yes, your money is safe in the bank. Opening a savings or checking account makes it easier to pay bills, save for the future, and manage your finances with tools like online banking.

During normal economic times, customers sometimes choose to diversify where they keep their money. For example, you can maximize interest and other earnings using accounts in addition to your regular savings account. In a steady economy, you might want to put money into several different types of accounts, including:

  • Savings Account: This is a type of account that allows you to make cash deposits and safely store your money with the bank. Many savings accounts even earn interest, so you can make money as you save money.
  • Checking Account: A checking account is another bank account where you can store money. Unlike savings accounts, however, checking accounts come with the ability to withdraw money or make purchases using checks or a debit card.
  • Certificate of Deposit (CD): Certificates of Deposit let you deposit a certain amount of cash into a savings account and receive guaranteed interest earnings on the funds over a set period of time. However, you may face penalties if you withdraw your money early.
  • Individual Retirement Account (IRA): An IRA is a popular retirement savings account that is separate from your employer and lets you put money into investments like stocks and mutual funds. You can contribute a certain amount each year and you’ll receive tax benefits on your money.
  • Investment accounts for Retirement or Education Planning: College funds, custodial accounts, and retirement savings accounts can all help you invest money now for a better future.


When the economy is stable, having multiple types of accounts allows you to potentially earn more from your savings. If the economy is in a less stable condition, however, you might worry that the bank is no longer safe.

Is My Money Safe in a Bank During a Recession?
Economic downturns and a turbulent economy can leave you feeling overwhelmed about your financial situation. If you lost your job or have been temporarily let go, you may be relying on a spouse, drawing from your savings and/or applying for unemployment insurance.

In times like these, you might want to take a look at where your money is currently located. Investment accounts like an IRA are not guaranteed, which means they could lose money. The good news is that with bank accounts with a guarantee, such as a regular savings account, you won’t lose money during a recession. That means your money is safe being left in a savings or checking account at the bank.

Do Bank Runs Still Occur During Difficult Economic Times?
When the economy becomes unstable, some people rush to withdraw their money from the bank as fast as they can. If a lot of bank customers pull their money out at once, it can create something called a “ bank run.” Bank runs usually stem from concerns that the bank itselff will run out of money. Ironically, this mass withdrawal can become a self-fulfilling prophecy that draws down the bank’s cash reserves.

The good news is bank runs are unlikely to be a problem in modern times. After numerous bank runs during the Great Depression, Congress created the Federal Deposit Insurance Corporation (FDIC) in the early 1930s. The FDIC helps protect consumers by insuring bank deposits up to a certain amount — even if the bank runs out of money.

Money During Turbluent Times

When Should I Take My Money Out of the Bank?
The short answer is to only take money out of the bank if you absolutely need it. If you’ve been laid off and need to withdraw from a rainy day fund to cover rent for the month, paying your rent is more important than leaving money in the bank. If you want to take money out just to keep at home, it’s probably better to leave it in the bank.

Is It Safe to Keep Money at Home?
Like many financial questions, the safety of keeping your money at home depends on your level of risk and how much you plan to keep at home. It’s usually considered a good idea to keep a few hundred dollars in cash in case of an emergency. If a natural disaster causes ATMs and banks to close, you can use that emergency cash to pay for food and water.

On the other hand, keeping too much cash at home could leave you with little to no savings in the event of an accident, like a fire. Reasons to keep your money in the bank, instead of stuffed in the mattress or a piggy bank at home, include:

  • Interest Earnings: Most bank savings accounts earn you interest on the money you deposit. Your money won’t grow at all if you hide it in a closet at home.
  • FDIC Insured: If a thief steals your identity and withdraws your money from the bank, you’re entitled to get it back through insurance from the FDIC. If someone breaks into your home and steals your money, there’s little chance you’ll get it back. The bank is also probably physically safer than your home. A fire could easily burn down your home, but most banks have secure vaults and fire-safety systems.
  • Easier to Manage: Even with social distancing and face-to-face contact limited due to COVID-19, banks make it easy to manage your money. Whether you use an ATM to withdraw cash, bank online, or pay with a contactless debit card, you have a lot more options to handle your finances instead of storing cash in your home.


Protect Your Money with an FDIC Bank
No matter the current economic outlook, the best way to protect your hard-earned money is by putting it in an FDIC-insured bank account. You’ll get insurance on deposits up to $250,000. If you have more than that amount in savings, you can always open multiple accounts to ensure you have insurance on all of your money.