Major bank's shock move to scrap cash (2024)

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Major bank's shock move to scrap cash? ›

A major bank has made the shock decision to scrap cash in all of its branches across Australia, in what could be another step towards a cashless society. Macquarie Bank has announced it will phase cash out across their branches in 2024, and by November of the same year, the bank won't accept cash anywhere.

Australia's fifth-largest bank has announced it will scrap cash and cheques in 2024. Macquarie Bank will transition to fully digital payments with cash deposits and branch withdrawals to cease in November 2024. From January, Macquarie customers will no longer be able to make payments over the phone.

Your money is safe in a bank with FDIC insurance

A bank account is typically the safest place for your cash, since banks can be insured by the Federal Deposit Insurance Corp. up to $250,000 per depositor, per insured institution, per ownership category.

This happens when people try to withdraw all of their funds for fear of a bank collapse. When this is done simultaneously by many depositors, the bank can run out of cash, causing it to become insolvent.

A bank's reserves are calculated by multiplying its total deposits by the reserve ratio. For example, if a bank's deposits total $500 million, and the required reserve is 10%, multiply 500 by 0.10. The bank's required minimum reserve is $50 million.

The big four banks have reassured customers they will maintain in-branch cash services, following Macquarie Bank's unprecedented move to phase out cash and cheque services entirely. Commonwealth Bank, ANZ, NAB and Westpac all confirmed on Friday that there are no current plans to go cashless.

The US is moving toward cashless payments, with a substantial increase in the use of mobile wallet apps and contactless cards. A report from the Federal Reserve Bank of San Francisco found that payments made using cash accounted for just 18% of all US payments in 2022.

In conclusion, banks cannot seize your money without your permission or a court order. However, there are scenarios where banks can freeze your account and hold your funds temporarily.

Your bank may allow you to withdraw $5,000, $10,000 or even $20,000 in cash per day. Or your daily cash withdrawal limits may be well below these amounts. It's important to note that the federal government tracks large cash withdrawals and deposits.

If you withdraw $10,000 or more, federal law requires the bank to report it to the IRS in an effort to prevent money laundering and tax evasion. Few, if any, banks set withdrawal limits on a savings account.

How safe are the banks right now? ›

Most deposits in banks are insured dollar-for-dollar by the Federal Deposit Insurance Corp. This insurance covers your principal and any interest you're owed through the date of your bank's default up to $250,000 in combined total balances. You don't have to apply for FDIC insurance.

In the case that an individual has not paid their taxes and is unresponsive to the IRS's requests, the IRS may take extreme measures– such as taking the money from your bank account in order to satisfy the debt.

Still, the FDIC itself doesn't have unlimited money. If enough banks flounder at once, it could deplete the fund that backstops deposits. However, experts say even in that event, bank patrons shouldn't worry about losing their FDIC-insured money.

For example, you might be capped at $1 million for a single deposit account and $3 million across all of your accounts. Depending on your bank, the limits may be higher, lower or nonexistent.

The average American has $65,100 in savings — excluding retirement assets — according to Northwestern Mutual's 2023 Planning & Progress Study. That's a 5% increase over the $62,000 reported in 2022.

While the future demand for cash is uncertain, it is unlikely that cash will die out any time soon.

If it's been a long time since you pulled out actual dollars and coins to pay for something — here's a conversation for you. It might seem like cash is slowly becoming obsolete. But, Brett Scott says it's a false narrative that we're all pining for a cashless society.

Already, some banks have scrapped over-the-counter cash transactions in some branches. Globally, there has been a rise in the development of alternative payments solutions such as digital wallets, prepaid cards and cryptocurrencies.

The collapses of Silicon Valley Bank and Signature Bank in March 2023—then the second- and third-largest bank failures in U.S. history—took consumers by surprise. Subsequently, three more banks failed in 2023: First Republic Bank in May, Heartland Tri-State Bank in July and Citizens Bank of Sac City in November.