Should I Keep Cash at Home?

Q: I’ve been seeing posts all over social media about keeping cash at home during times of rapid inflation. Is this a recommended practice?

A: Keeping large amounts of cash in envelopes, kitchen drawers or stuffed under the mattress is not recommended during times of inflation – or at any other time. Here’s all your questions on handling cash during times of inflation, answered.

Why is it a bad idea to keep cash at home?

While it’s perfectly okay to keep some cash at home, storing a large amount of funds in your house has two significant disadvantages:

• The money can be lost or stolen. Hiding cash under the mattress, behind a picture frame or anywhere in your house always carries the risk of it being misplaced, damaged or stolen. As careful as you may be, circumstances beyond your control may cause you to lose that money. The money may be lost, stolen, or damaged, and unfortunately, there is no way to trace or reclaim lost or stolen cash.
• The money isn’t growing. When cash doesn’t grow, it loses some of its value. This is especially true during times of rapid inflation.

Where is the best place to keep cash?

In times of high inflation, and anytime at all, it’s best to keep the money you don’t need for day-to-day expenses in a place where it can grow. This way, the growth will serve as a hedge against inflation. When inflation is lower, your funds can grow generously, especially if you keep the money in a savings vehicle for an extended period of time. Here are some places you may want to keep your cash at this time:

• Savings account. A savings account offers a safe and secure place to keep extra funds. When you open a savings account at SCU, there’s no risk of your money being lost or stolen.
• Share certificates. A share certificate is a savings account that is federally insured and has a fixed dividend rate and a fixed date of maturity. The dividend rates of these accounts tend to be higher than those on savings accounts, and there is generally no monthly fee to keep the certificate open. The fixed dividend rate will remain unaffected by the national interest rate, which can fluctuate tremendously during times of high inflation.