During the Great Recession, there were stories of citizens hoarding cash at home in fireproof safes or under mattresses. With fears mounting about the current economic climate, Marshfield Medical Center Credit Union (MMCCU) wants to emphasize that money is safer at a credit union or bank than tucked away as cash. This is because there are significant risks associated with storing physical cash, such as the increased risk of theft or exposure of loss should a natural disaster (like fire or tornado) destroy a person’s house.
“An individual may not be protected if the money gets stolen or destroyed in the event of a robbery or fire,” said Carol Kulibert, Operations Manager at MMCCU. “Homeowners or renters insurance may not have high limits when it comes to protecting the loss or theft of cash within your home. It is important to review your policy.”
With the federal government backing deposits, it’s safer to keep excess deposits in an account with a federally-insured financial institution, rather than elsewhere. The vast majority of credit unions and banks are insured by the Federal Government up to a certain dollar threshold. For credit unions and banks, this insurance is for up to $250,000.
“Also, when you leave cash at home, you are not earning dividends,” explained Kulibert. “The dividends from a credit union may not seem like a lot, mostly with the low dividends rates now, but every bit counts. It is better to keep your money at the credit union where it will earn dividends and have full protection of the NCUA.”
Credit unions are governed by the National Credit Union Administration (NCUA), a government regulator which is responsible for the safety and soundness of credit union operations. The government ultimately has allocated funds to be used if a credit union fails and the remaining assets of the credit union aren’t sufficient to cover every member’s deposits.
“With the drop in rates, we understand there may be little incentive to keeping your cash on deposit at a local credit union or bank, however, the protection from the federal government over your deposits, along with the piece of mind of knowing you can access your cash through numerous means, like your debit card, online banking, or paper checks, may more than pay for itself in the long run,” added David Murphy, VP of Finance & Risk at MMCCU. “We have enough to worry about in our lives: paying bills, raising kids, aging parents…don’t add to your stress levels by worrying about large sums of physical money every second of the day.”
“A story I found interesting is, in 2006, a contractor was renovating a bathroom and found $182,000.00 of Depression-era money in the walls. The moral of the story: Do not hide money in places you will not remember,” said Kulibert. “It is very easy to forget where you hid your money. In 2009, a woman gave her mother a new mattress and threw out the old one. The mother had $1 million of her savings inside the old one.”
“The adage ‘Cash is King’ continues to play a role in our tech-driven world, and we support the use of cash in your routine transactions,” said Murphy. “However, your cash loses any protection if lost or stolen once it’s physically taken from the credit union, and typically, there is no way to get that cash back once it’s gone.”