Provided by American Financial Advisors, LLC

 

An “eye-popping” $2 trillion in cash has been stashed in deposit accounts at U.S. banks since the COVID-19 pandemic first hit the country in January.¹

 

This surge of money into banks has no precedent in history. 

 

Several factors have contributed to the cash surge, including $600 billion in government-sponsored loans to small businesses, direct checks to individuals, and expanded unemployment benefits. Additionally, Americans have had fewer options for spending their money while on lockdown. 

 

So, how long will the $2 trillion remain in the bank? That’s uncertain and the subject of much debate.

 

We do know that individuals rely on banks to keep their money safe from loss or theft, to make payments easily and inexpensively, and to maintain records of financial transactions. In general, however, individuals don’t expect bank accounts to generate much interest income. In fact, the average interest rate for savings accounts is 0.1%.^2,3,4

 

What’s worse is that banks are not expected to adjust interest rates any time soon. Simply put, they don’t need the money.⁵

 

For many, banks play a key role in their personal finances. But sometimes, it’s good to revisit your accounts to see if they still are in line with your situation and goals. If you have any questions about the role of certain accounts, please give us a call. We'd welcome the chance to discuss what strategies may fit your situation.

 

 

_{This material was prepared by MarketingPro, Inc., and does not necessarily represent the views of the presenting party, nor their affiliates. This information has been derived from sources believed to be accurate. Please note - investing involves risk, and past performance is no guarantee of future results. The publisher is not engaged in rendering legal, accounting or other professional services. If assistance is needed, the reader is advised to engage the services of a competent professional. This information should not be construed as investment, tax or legal advice and may not be relied on for the purpose of avoiding any Federal tax penalty. This is neither a solicitation nor recommendation to purchase or sell any investment or insurance product or service, and should not be relied upon as such. All indices are unmanaged and are not illustrative of any particular investment.}

 

_Citations:

_{1 - CNBC.com, June 21, 2020}

_{2 - Federal Reserve Bank of Atlanta, 2020}

_{3 - BankRate.com, May 5, 2020}

_{4 - The Federal Deposit Insurance Corporation (FDIC) insures bank accounts and certificates of deposit up to $250,000 per depositor, per institution, in principal and interest.}

_{5 - CNBC.com, June 21, 2020}