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There are many uncertainties facing people in modern economic situations today. Natural disasters and the national economic crisis plague domestic and international peoples alike. Many banks failing that cause consumers to have assets at risk. Changes in the Earth causing earthquakes and floods that could shut down banking systems temporarily, leaving people cut off from their assets. How do you protect your assets and keep your money safe? How do you save money and remain as anonymous as possible in order to protect yourself? Try taking your money out of the bank and keeping it in a safe.
About Bank Failure
Since 2008, there has been a crisis in the banking industry. From the years 2008-2010, over 300 banks have failed and been taken over by the FDIC to cover the insurance. $633,308 million dollars in assets were involved over this three year period, putting a dent in the FDIC $45 billion insurance fund. The FDIC reports the number of banks that are at risk annually, but it will not disclose which banks are at risk.
There is no indication that the number of banks that are failing is slowing down. So far this year, 26 banks have failed with many others still at risk. To offset the dwindling insurance fund, The FDIC is proposing to raise insurance premiums for banks, who in turn would try to offset those costs by passing them on to the consumer in terms of fees and account charges. Taking your money out of the bank and keeping it in a safe could be a wise economical move in terms of savings.
When a financial institution fails, sometimes the assets of the bank are assumed by another institution. The transition of accounts is usually transparent for consumers, however when bankruptcy occurs then consumers have to wait for the FDIC to issue checks for their insured assets. Consumers also have to make other arrangements for direct deposits and automatic payments. This can be very inconvenient and could cost you money in terms of having to take time from work to settle financial affairs.
Most banks are insured by the FDIC in order to protect consumers. While the amount that each depositor is insured for has increased since 2008, consumers with a lot of assets deposited into the bank may find that anything above the insured amount can make the FDIC consider you a creditor to the bank. They will determine how much of your assets can be recovered based on the insurance fund allotted to the failure.
The insurance limit per depositor is $250,000. This means that if you have more assets than this in your account and it is not deposited in a well thought out and clever manner in order to cover those assets, your assets may not be covered and you may not be paid back the full amount of your balances. Having too much money in the bank when it fails can possibly cost you because the FDIC often times only returns on average of 72 cents on the dollar for assets.
Whether or not you decide to continue to have faith in the banking industry or not, if a bank fails you may find that your assets are tied up for a week or two while the FDIC issues insurance checks. Having some money in a safe at home instead of keeping it all in the bank will protect you in the event you lose access to some of your assets while the insurance checks are being distributed.
Banks can be Costly
Congress is proposing a plan that will reduce the amount of fees that are collected when a consumer swipes their debit card to make payments at the store. This move would cost some banks a billion dollars in lost revenue. Banks are working at making costly adjustments to consumers in order to make up for the loss the legislature would cause.
The average cost per swipe for a debit card that banks charge is a little over 40 cents, and the new regulations would reduce this amount down to around 12 cents. This would seem like it would be advantageous to consumers and that it would save them money, but in the long run it could actually cost you the same amount or more due to the solutions banks are planning on implementing to compensate for the loss in revenue the new legislation would cause.
In order to offset the losses of revenue, banks are considering raising fees for ATM usage. In addition they are thinking of adding annual fees to debit cards, eliminating rewards programs and putting caps on spending limits so that you have limited access to your money. Banks are also considering raising charges in checking accounts. If your money is in a safe, you can control how much you want to take out to spend and save money on fees.
Privacy and Keeping Your Money at Home
Beside saving you money on bank fees and charges, keeping your money at home and paying for your purchases by cash or money order has certain advantages. The main advantage is the anonymity that paying in cash affords. You do not have to provide information about who you are to make purchases in cash, so merchants will not send you solicitations based on the information they collect about you when you use a debit card. No one can keep track of your spending habits if you are paying cash, allowing you the freedom of anonymity.
You do not have to provide your debit card information to dishonest clerks who can steal your debit card number and make charges against it. You do not have to put your driver license number on checks so that people viewing the check cannot steal your identity and ruin your credit. This makes paying for items with cash more appealing because it protects you from thieves and the hassles of trying to sort out fraudulent charges with banks that might not cover the fraudulent charges depending on the type of account you have.
Some banks have spending limits in place on debit cards that limit your access to your personal funds. This makes it very difficult to purchase high priced ticket items like electronics. If your cash is kept at home you can control the amount you want to take with you to spend on purchases. Without a debit card in hand, and by only taking a set amount of money with out on shopping excursions you can cut back on impulse buys at the stores, so saving money by setting your own limits during how much you take out of the safe is one of the best ways to go.
Having your assets on hand makes it more realistic and easier to manage. You will always know how much cash you have on hand, and will not have to keep track of transactions and whether or not they have gone completed yet. Having complete control of when a transaction takes place will leave less room for error when budgeting because it will eliminate errors when transactions are mistakenly omitted from the balance book. These mistakes would otherwise possibly lead to hefty overdraft fees if the money had been in a bank. There is no missing a transaction on a balance book when you pay outright in cash, and you save time by not having to monitor a bank account for transaction flow.
When Nature Strikes
The 6.4 magnitude earthquake that hit Japan and the resulting tsunami that followed devastated Japan. Physical damage to the country is estimated at $250-300 billion and tens of thousands of people lost their lives to this natural disaster that affected the world's third largest economy in the world. When disaster occurs like this, it can be devastating to an economy and take years to rebuild and recover. Production of electronics, cars, and other exports are halted, resulting in inflated prices due to low supply. Stock market prices plummet and communications systems can be temporarily interrupted.
Thousands of people were left displaced from the earthquake that occurred in March 2011. In the event of a natural disaster like an earthquake or flood, electronic communications can go down and people may lose access to money that is tied up in banks temporarily depending on the seriousness of the disaster. Having extra food and cash on hand will prevent you from being able to provide for yourself in the event that a natural disaster interrupts computer systems and communications.
It is recommended that the best practice for investing towards a natural disaster should be that you have enough cash to pay for your expenses for several months. Keep in mind that you should hold into account that prices will be inflated in the event of a natural disaster due to supplies being disrupted and unavailable. You should invest in food that has long shelf life, water purification equipment, water, first aid, and camping equipment. You can also purchase these items to use for bartering in the event that money loses importance or value to other people.
Other Places to Keep Your Money
The downside to keeping your money in a safe is that there is no reward that comes with investing it. One good investment right now would be in purchasing precious metals. Gold and silver coins have a value that fluctuates. Gold is a more consistent and sometimes more valuable commodity than cash. Gold and silver coins can be used as currency and values tend to go up when inflation is high. Investing in gold and silver can be costly and the coins can be hard to find, but they can be well worth the effort of finding and investing in them and selling them later in order to gain profit or keep yourself stable in bad economic times when normal currency has little value.
Summary
The economy and banking institutions are fast faltering due to the recession and other national disasters that have been plaguing us on a domestic and international level. Keeping your money in a safe may prove to add security and save you time, money and inconvenience from the multitude of bank failures that are rampant across the country. Keeping your money in a safe can save you the time and hassle of managing an account by having to keep track of regular transactions, fees, and charges in a balance book and will avoid costly overdraft fees that come from human and bank error. Lastly, having your money in a safe at home will allow you anonymity and freedom as well as allow you access to your financial resources in the event of an emergency.
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