An economy without banks is one of the most frightening financial scenarios for a society. Imagine if the banks were to disappear tomorrow. What would happen to our money? However, this is not a hypothetical question.
Many of our largest financial institutions are already leaving the country or preparing to do so. When deciding to leave the country, a bank will likely work with regulators to ensure its domestic operations remain secure. In the past several months alone, Wells Fargo and JPMorgan Chase have announced plans to close 39 locations in the U.S. and hurt about 5,000 local jobs.
Has anyone’s phone alerted them about a car crash ahead? Similarly, the financial cris will arrive unannounced. How would you protect your money in this scenario? How would you keep your money safe?
Stay in Business By Keeping Good Relationships With Your Customers
Customers don’t always come first for banks. Many executives make money by building and managing relationships with customers. If banks were to close, it would be devastating for many of these relationships. Customers will likely start to test out other banks and may never return to a closed bank. Banks also make money by converting cash into loans. If a customer is unable to repay their loan, the bank has the right to foreclose and sell the property.
Have A Secure Network
Like banks, financial institutions are made up of people. Even though these institutions have computers and software to keep your information safe, people still make errors. If someone hacks your accounts, they could access your personal information, such as your social security number or credit card numbers.
Could the same thing happen to your account if a bank is hacked? What if someone also gains access to your computer? What if that person can see everything you do on the internet? Even if someone is meticulous, you cannot be 100% safe. Your money is at risk wherever it is stored. Your money is also at risk if you don’t take proper precautions.
If you don’t monitor your accounts carefully, you could spend more money than intended. If someone gets access to your money, they could spend it somewhere else or use it to buy something that you need.
Ditch The Digital Wallet
We’ve all heard dreadful stories about people who lost their debit or credit card while using cash. That will not happen to you if you ditch the digital wallet. There are many online financial services that you can use, either as a stand-alone app or as a part of a banking platform.
If you switch to a different service, you have to re-setup your account, including your password. You also have to update your data whenever a company changes its policy. This process can be time-consuming and irritating. It’s even more difficult to switch providers because your wallet holds several cards and accounts.
Get A Good Money Management App
Money being the root of all activity, it follows that a good money management app would help you control your finances. You can use software or app to track income, expenses, and savings. You may also want to monitor your investment portfolio or track your investments against a stock exchange.
A good money management app can help you stay on top of the news so that new developments do not throw you off. Many great money management apps shall ensure you don’t miss any bills or payments and help you save.
Many of these apps can help you save for large bills or a car repair. These apps can also help you save for retirement by helping you track your investment income and expenses to determine if you’re spending too much or too little on your bills.
Lock Your Savings Account
When you lock your savings account, it’s like protecting your money in an airtight case. The bank can’t take it away from you unless you want them to. It also means that the government can’t take your money and give it to another country. This also means that you make tax payments and premium payments are safe.
The only person who can take away your savings account is yourself. If you want to put your money in a savings account but don’t want to risk it, you can always keep it in your control savings account. It can be a money market account or a savings bond.
Credit And Debit Card Fraud
Credit and debit card frauds happen when someone else steals your identity so that they can use your money. Your money is actually in their hands if someone can get your personal information, like your credit or debit card number.
Your money is actually in their hands if someone can get your credit card number or debit card number. If someone can get your card number and financial data, they could use it to get cash or make purchases without your approval.
If this is the case, you could incur a chargeback or contact the card company to get your data erased. These types of fraud are rare, but they do happen.
How To Protect Your Money When Your Bank Disappears
Keep Track of All Your Accounts Make sure you keep track of your bank accounts and other financial accounts. Make a list of every account you have, and make sure you update your information whenever there is a change in your account information. It will make it easier to keep track of your money and prevent fraud.
Maintain A Healthy Bank Account Credit and debit card companies encourage this, but it’s crucial to maintain a healthy bank account. Pay the bills on time, pay off the balance when due, and maintain a healthy balance. If you procrastinate or even make a partial payment, you can usually get the money back or an interest-free loan.
Employ A Money Management Company A good money management company can help you stay on top of your finances. These companies can help you track your money and help you stay on course with your finances. They can also give you ideas on saving money when you have it.
A good money management company can also help you get a handle on your investments so that you don’t end up with a huge investment loss. These companies can help you stay on top of all your financial needs.
Regularly Update Your Credit Card Information Did you know that some credit card companies give you the option to “flag” your credit card as stolen? When you “flag” the card as stolen, the company is notified so that they can help you get a new card or get your money back.
Make sure that you keep up with your credit card company so that you aren’t giving them false information. Keep A Check On Your Finances This might seem like a no-brainer, but many people don’t take it seriously enough. Make sure you regularly audit your bank account and have a plan for when something goes wrong.
You can also keep a daily journal to track your spending and income. It will help you stay on top of your finances and know what to do if something goes wrong.
The Importance Of Banks
As we’ve seen, financial institutions are getting destroyed every day. What happens when one goes under? Who’s responsible for that financial stability? You and your family.
If a bank decides to shut down, you and your family are in danger of going without a financial backstop. That’s why it’s critical to have a bank that you can trust. You can go with a big national bank or local savings and loan. There are also online banks and credit unions.
What If Banks disappeared?
The scary thing is, it probably won’t happen tomorrow. For the most part, banks don’t go out of business. But a few things could cause one to close its doors for good. If a bank gets into big trouble — like inheriting too much bad debt or a decade of bad investments — it might be hard for owners to get together and save the bank.
At that point, the government might be able to take control and save the country from financial disaster. But even in a best-case scenario, it’s likely that you wouldn’t be able to deposit money into your savings and loan account or make a payment on a home or car loan without a special government-issued card.
The Problem With “Financial stability.”
Banks are financial institutions, just like credit unions or banks. And just like those other financial institutions, the government can pick up the slack if and when a bank goes under. At the same time, some things make a bank different from other financial institutions.
One of them is “financial stability.” Financial stability is a fancy term for being able to pay your bills and make payments on your mortgage or credit card without going under. If a bank goes out of business, you and your family are likely in trouble. You will be without a financial backstop, but you may also not be able to take out a mortgage or make any significant purchases without a big financial impact.
What Will Happen When The Banks Go?
The government can also close a bank if it’s deemed too risky to hold by the financial community. If a bank gets into debt, which it can’t repay, the government could force a cash takeover of the bank to prevent a total financial collapse. (The government has done this before, in the case of AIG.)
In some cases, the government will put a plan in place to keep a failing bank operating. But in other cases, a new owner will have to come up with a plan to save the bank before it’s allowed to go under.
What would happen to the economy
With the banks gone, businesses and individuals would have little to no regulation to help them run their businesses. In fact, without any central regulatory authority to oversee the financial sector, there is no way to ensure that businesses are not engaging in risky practices. Think of all the financial products and services that are out there today.
What would happen to bank reliability
On top of everything else, banks would do whatever was most accessible and most manageable for them to do without any regulation. If a bank wants to offer a specific product or service, it will offer it alongside that product or service. But if a bank doesn’t have to offer that product or service, it doesn’t have to. This leads to the most significant change in banking: no more banks.
How Would The Economy Change?
Before we go into how a banking disappearance would change the economy, let’s look at what would happen if the big banks vanished. We’ll start with the most prominent part: the economy would crash without a central bank to regulate banking. But then, how would the crash happen? First, there would be a massive disruption in the financial markets.
Securities and commodities markets would implode, and with them, the financial institutions that back them. It would send the rest of the economy into a tailspin. Second, there would be a shortage of money in the economy. Most people consume money. If there isn’t money in the system, people wait, borrow, or steal to get what they want. Without money, people can’t buy groceries, pay their bills, or travel. It would lead to mass starvation and create a giant humanitarian crisis.
What Could Go Wrong?
Before we get into the adverse side effects of a banking disappearance, let’s start with the positive side effects. Without a central bank to regulate the financial sector, there would be no oversight of the banks. That means no safety regulations for banks, no monitoring of their financial condition, and no way for taxpayers to force them to come clean about past or present financial misdeeds.
Additionally, banks would be free to operate as they please. Although they would have to comply with some regulations, like no longer being allowed to operate as commercial banks, banks would still be able to charge whatever they want.
As bank branches and executives close their doors, it’s important to remember that many financial institutions are still willing to help. For example, hundreds of banks in Canada will still gladly provide you with a loan, despite not being in business. When it comes to safeguarding your money, the decisions you make today will have a big difference in the outcome of this scenario.
We’ve seen banks close their doors in the past and how it affects how customers use that bank. If you have concerns about your bank in this scenario, it might be good to check out a third-party list of trusted banks still in business.
The only reason to avoid banks is if you want to keep your money safe from risk and investment losses. Banks are incredibly safe investments. And if you’re careful with your money, you can make a significant impact each month by using your savings account at a bank.