Don't Dash For Cash: Authorities Say There's No Need To Empty The ATM

Mar 26, 2020
Originally published on March 26, 2020 8:09 pm

Toilet tissue isn't the only paper product that Americans are hoarding these days. Paper money is also in high demand.

Banks are seeing more cash withdrawals as nervous customers try to protect themselves from the uncertainty of the coronavirus clampdown.

There are reports — especially from wealthy neighborhoods — of people pulling tens of thousands of dollars out of their bank accounts. Demand was so high that one bank branch in Midtown Manhattan temporarily ran out of $100 bills, The New York Times reported. The bank was quickly resupplied the following day.

While stocking your pantry with pasta and canned goods may provide some measure of security, officials say there are risks to keeping too much cash on hand.

"Forget the mattress. Forget hoarding cash. Your money is the safest at the bank," said Jelena McWilliams, chairman of the Federal Deposit Insurance Corp., which safeguards bank accounts.

McWilliams understands the anxiety that the coronavirus provokes. She'll confess to making her own panicked grocery run to Costco. But the federal bank regulator says there's no need for customers to empty the ATM.

"Just as it is not necessarily rational to hoard toilet paper, it is also not rational to hoard cash," McWilliams said.

Some banks have limited hours or even closed branches out of concern for their workers' health. But ATMs are still operating and getting frequent cash deliveries from armored trucks. Treasury Secretary Steven Mnuchin noted this week that armored truck drivers and others who work in financial services are considered essential parts of the nation's critical infrastructure.

Because that infrastructure is still functioning, financial advisers say the race to grab cash is misguided.

"This is not a natural disaster like a hurricane or an earthquake where the electricity is out," said Greg McBride, chief financial analyst at Bankrate.com. "This is the opposite in many ways, in that, if you're holed up at home, having a pile of cash isn't going to do you a whole lot of good."

McBride said homebound customers are better off leaving their money in the bank so they can pay their mortgage and credit card bills online. It also relieves any worry about loss or theft.

Before the coronavirus hit, Americans were steadily moving away from cash and increasingly relying on credit cards, debit cards and new forms of digital payment.

"Even person-to-person payments, that's increasingly done through apps like Venmo or Zelle and not by reaching into your pocketbook, pulling out some green stuff and handing it to your colleague," McBride said.

Of course, millions of Americans don't have bank accounts and may have to rely on cash. Some have suggested that handling paper money may increase your chances of getting or passing on the coronavirus, although there's little scientific consensus on that.

In some cases, people's rush to pull money out of the bank has been stoked by scam artists. The FDIC warned a California gold dealer last week to stop advertising its products with the false claim that consumer bank accounts could be seized in a time of crisis.

"That is absolutely false," McWilliams said. "It's patently false. And frankly it's criminal in my opinion."

The nation's banks came into this crisis in strong financial shape. Even if a bank were to fail, deposits are insured up to $250,000 per depositor per institution.

"Nobody has ever lost any money guaranteed that's been protected by federal deposit insurance," McBride said. "I think that's a point worth underscoring to consumers that are unsettled enough by the events going on from a health standpoint."

: 3/26/20

A previous version of the Web story incorrectly said that deposits are insured up to 0,000 per account. In fact, the limit is 0,000 per depositor per institution.

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Toilet tissue is not the only paper product that Americans are hoarding. Some people are stockpiling paper money - though there are risks to keeping too much cash on hand. NPR's Scott Horsley reports.

SCOTT HORSLEY, BYLINE: In a frightening time, cash can seem like a much-needed security blanket. In wealthy neighborhoods around the country, there are reports of people pulling tens of thousands of dollars in cash out of their bank accounts. Demand was so high, one bank branch in midtown Manhattan temporarily ran out of $100 bills. The New York Times says the bank was quickly restocked, but federal bank regulators are urging customers to calm down.

JELENA MCWILLIAMS: Forget the mattress. Forget hoarding cash. Your money is the safest at the bank.

HORSLEY: Jelena McWilliams is the chairwoman of the Federal Deposit Insurance Corporation, which safeguards bank accounts. She understands the anxiety the coronavirus provokes but says there's no need for customers to empty the ATM.

MCWILLIAMS: Just as it is not necessarily rational to hoard toilet paper, it is also not rational to hoard cash.

HORSLEY: Some banks have closed branches or limited hours out of concern for their workers. But ATMs are still operating, with frequent cash deliveries from armored trucks. Treasury Secretary Steven Mnuchin noted this week armored truck drivers and others who work in financial services are considered essential parts of the nation's critical infrastructure. Greg McBride of bankrate.com says because that infrastructure is still functioning, the race to grab cash is misguided.

GREG MCBRIDE: This is not a natural disaster, you know, like a hurricane or an earthquake, where the electricity's out, payment systems are down. This is the opposite in many ways in that if you're holed up at home, having a pile of cash isn't going to do you a whole lot of good.

HORSLEY: McBride says homebound customers are better off leaving their money in the bank so they can pay their mortgage or credit card bills online - and where they don't have to worry about loss or theft. Before the coronavirus hit, McBride notes, Americans were steadily moving away from cash, relying more and more on credit or debit cards as well as digital payments.

MCBRIDE: Even the person-to-person payments, that's increasingly done through apps like Venmo or Zelle and not by reaching into your pocketbook, pulling out some green stuff and handing it to your colleague.

HORSLEY: Of course, there are millions of Americans who don't have bank accounts and may have to rely on cash. Some have suggested handling paper money may increase your chances of getting or passing on the coronavirus, although there's little scientific consensus on that.

In some cases, people's rush to pull money out of the bank has been stoked by scam artists. McWilliams says the FDIC warned a California gold dealer last week to stop advertising its products with the false claim that consumer bank accounts could be seized in a time of crisis.

MCWILLIAMS: That is absolutely false. It's patently false. And frankly, it's criminal in my opinion.

HORSLEY: The nation's banks came into this crisis in strong financial shape. Even if a bank fails, McBride says, deposits are insured up to a quarter-million dollars per person.

MCBRIDE: Nobody has ever lost any money that's been protected by federal deposit insurance. And I think that's a point worth underscoring to consumers that are unsettled enough by the events that are going on from a health standpoint.

HORSLEY: So if you need a security blanket in these uncertain times, grab an extra roll of toilet paper - if you can find one. But leave your cash in the bank.

Scott Horsley, NPR News, Washington. Transcript provided by NPR, Copyright NPR.