Is it safer to keep money in the bank or at home?
It's a good idea to keep a small sum of cash at home in case of an emergency. However, the bulk of your savings is better off in a savings account because of the deposit protections and interest-earning opportunities that financial institutions offer.
Generally, money in the bank is safe—even in a recession or other tough economic times. However, depending on several factors, including your balance and the type of account, your money might not be completely protected.
The real danger of keeping money in a bank is that it's not a safe place. Banks are not insured against losses and can fail at any time. In fact, there's a high likelihood that your bank will go out of business before you do.
Savings accounts are a safe place to keep your money because all deposits made by consumers are guaranteed by the FDIC for bank accounts or the NCUA for credit union accounts. Certificates of deposit (CDs) issued by banks and credit unions also carry deposit insurance.
Most financial experts end up suggesting you need a cash stash equal to six months of expenses: If you need $5,000 to survive every month, save $30,000. Personal finance guru Suze Orman advises an eight-month emergency fund because that's about how long it takes the average person to find a job.
Jesse Cramer, founder of The Best Interest and relationship manager at Cobblestone Capital Advisors, believes less than $1,000 is ideal. “It depends person to person, but an amount less than $1,000 is almost always preferred.
It's important to keep money in a savings account for emergencies. Once your emergency fund is complete, investing your extra cash is a smart move.
Your money will be protected from theft and fires. Plus, your money will be federally insured so if your bank or credit union closes, you will get your money back. The maximum amount of money that can be insured is $100,000. Many banks offer an interest rate when you put your money in a savings account.
- High Yield Savings Accounts.
- Certificates of Deposit.
- Traditional Savings Accounts.
- Money Market Accounts.
- Treasury Bills and Bonds.
- Retirement Savings Accounts.
- CDs. Interest rates have risen considerably in 2022, and it could be a great time to lock in an interest rate on a CD. ...
- High-yield savings accounts. ...
- I bonds. ...
- Start a brokerage account. ...
- Invest for your retirement. ...
- Save for college. ...
- Pay down high-interest debt.
Where is the best place to keep your money besides a bank?
Credit Unions and Online Banks
Online banks, such as Ally Bank or American Express Bank, also typically offer higher interest rates on savings accounts. They are able to do this because they avoid the brick-and-mortar overhead expenses of maintaining physical branch offices.