To bank or not to bank. It's a question that's been plaguing USAmericans since before my grandmother was sewing money into her curtains. As part of The Greatest Generation, she was a child during the Great Depression from 1929 to 1939. At just 20, when the Great Depression ended, she couldn’t trust banks. 

Now, some 85 years later, people are once again wondering if the banking system is the best place for their money. Many people like the appearance of safety from their FDIC (Federal Deposit Insurance Company) insured funds. However, if the collapse of banks like SVB in March 2023 tells us anything, it's that banks can and do fail. 

If you're on the fence about whether stashing your cash in a bank is a smart financial move, we've created a list of some of the best reasons you might want to reconsider pouring your savings into your local bank. 

1. Exploring Opportunity

Being able to “play” with your investments can be a big draw for people who aren't keen on earning minimal interest from a savings account. Whether you want to buy a piece of real estate, grab a well-performing cheap stock, or sink some money into bonds earning a good rate, having your cash on hand is critical. 

This ability to move quickly on an investment opportunity is a solid reason for keeping money out of the banking system and having it on hand at a moment's notice. 

2. Diversification is Key

When people start saving money, their first inclination is usually to open a savings account to accompany their checking account at their preferred bank. However, after a bit, they may also consider other investment options like gold, silver, stocks, bonds, and CDs. These investment tools allow people to diversify their portfolios, so most of their money is sitting outside the bank. 

This urge to diversify assets is why many wealthier people don't stash a lot of cash in the bank; frankly, it makes a lot of sense. Choosing the tools that work best for you may mean putting a little bit more or a little bit less cash in the bank. 

3. High Bank Fees

Knowing how and where to do your banking can save you considerably on fees. For instance, if you use an out-of-network ATM (automated teller machine), you may be charged by your bank and the bank that owns the ATM. You can avoid this double charge by using an ATM that integrates with your specific banking institution. 

Other fees, such as wire transfers, faxing documents, overdrafts, and cashier check fees, can all eat into your savings. Exorbitant fees are another reason people are starting to think differently about banking. 

4. Negative Interest

Negative interest rates aren't a common occurrence. However, on the off chance that you have money in the bank when they hit, your balance could definitely see a drop. Wariness when it comes to banking has been an on-again, off-again thing, especially since 2008. People just don't feel secure about putting large amounts of money in the bank anymore. 

Negative rates, bank runs, and the like have made it a bit scary to think about putting your life savings in a bank and watching it slowly dissipate. While negative interest rates might not be typical, it's just one more con of stashing cash in a bank for many USAmericans. 

5. Economic Instability

When money is already tight, people don't feel comfortable keeping their money in a bank. They start to ask questions about availability. What if they can't get to an ATM or access their money? What happens when the money runs out? 

Many people choose to keep their cash on hand in hard economic times because life can be so unpredictable. When people don't feel secure, cash is still king and offers a bit of security in a time of uncertainty. 

6. Emergency Funds

With more and more Americans struggling to make ends meet, saving up an emergency fund is like a pipe dream. More than half of Americans (57%) can't afford to cover a $1000 emergency. Because of this, many US citizens focus on keeping as much of their disposable income on hand as possible. 

When you can't save for an emergency, storing your cash in a bank where it may be inaccessible may seem like a bad idea. This is one reason people avoid putting extra cash in a bank. 

7. Strategic Cash 

Like many people, I didn't grow up with parents who were good at budgeting or living within their means. Debt is often the name of the game when it comes to dealing with finances for many USAmericans, simply because we don't focus a lot of early education on dealing wisely with money. 

However, for many, keeping money out of the banking system is all about having a strategic cash supply. This isn't money thrown down for a fun weekend or a trip to Las Vegas. Instead, it's cash that waits for the right opportunity. It could be a piece of real estate you can't pass up. It might be a different sort of investment or activity that directly correlates to a person's savings goals. Cash is still King in 2024, and having that cash available at a moment's notice can't be underrated. 

8. Privacy Concerns

Data hacks are a real concern for many in a world that runs on computer power and is wholly dependent on the internet. It's right up there with identity theft and other privacy concerns Americans have when it comes to banking. 

When hackers can instantly access the finer details of your financial situation, privacy goes out the window, leaving you open to fraud and other legitimate problems. This is one more reason many are wary of bank safety. 

9. General Mistrust

Raise your hand if you've ever wondered how much trust to place in banking. Me, me! In 2008, the US experienced a massive banking crisis when multiple banks like JP Morgan (now JP Morgan Chase), Wells Fargo, and Bank of America had to be bailed out by the government because they were “too big to fail.” 

With the collapse of Silicon Valley Bank and other smaller institutions, those fears are coming full circle again, making many wonder if their money is safe in any bank. When people no longer have confidence in a system, they will find an alternative, and many people often choose to forego banks for different avenues of savings. 

10. Extended Processes 

One trouble spot for many people is the lengthy process of dealing with a bank. If you're not used to face-to-face meetings or have an aversion to overwhelming situations, opening a bank account can be difficult. 

Paperwork, talking with a bank teller or employee, and the general process for creating a bank account can turn many people off to the idea, to the point where they won't even consider storing their money in a banking institution. 

11. Availability

Most banking institutions try to accommodate their customers as much as possible. However, a lot of banks are closed on Saturdays or Sundays. If you forget to pull money from your account on Friday, you might be in trouble over the weekend. 

My withdrawal limit isn't super high on my account, and while that usually doesn't cause a problem because I'm not a big spender, it can definitely lead to an issue if I need access to more cash than I can get from my bank's ATM. Availability, or the lack thereof, is a huge issue for some people when it comes to deciding whether to put their money in a bank. 

12. Limitations

Another issue for people who like to keep their money out of the banking system is the limitations on accessing cash from their accounts. If you want to make a cash purchase that's more than you can withdraw from an ATM and the bank is closed, it makes life more difficult. 

Not to mention that you may also run into a limit on how much you can spend from your account using your debit card. Some banks cap your account at $1000 or $3000; if your purchase happens to be more than that, the bank won't authorize the purchase. 

13. System Malfunctions

There is almost nothing more frustrating than having a power outage at your favorite store when you need to pick something up. When those nifty little machines can't accept your bank or credit card, life can get much more challenging very quickly. This also applies to ATMs (automated teller machines.)

To combat this, many people will keep a decent amount of cash on hand to ensure they can purchase items during a storm or other severe circumstances. It's part of being prepared for an emergency. How much cash to keep on hand depends on personal preference and level of trust in the banking system in general. 

14. Minimum Balance

One common drawback of keeping your money in a high-yield savings account or money market account is that most banks require a minimum balance. This means that if you want to open an account like this to hold excess savings, you'll have to continually meet that minimum. If you happen to fall under that minimum during a given month, the bank may charge you a fee for not keeping the required account balance. 

Banks can loan out nine times the amount you place in the bank, thanks to your savings. If you put in $25,000, the bank can then turn around and loan out $225,000. This is called fractional reserve lending and is commonplace among banking institutions. So, if you fail to meet the required account minimum, you can see why a bank would take issue with that. 

15. Easy to Spend

Placing your money in a bank can make it easily accessible. This easy access means that no matter how badly you want to save toward your financial goals, you may spend more than you intended because the money's easy to get to. 

If you happen to be an impulse spender, having your money within arms reach can also prove detrimental to your savings account. Having money on hand all the time can be all too easy to overspend, knowing in the back of your mind that you always have the money to cover that “little bit extra.”