Have you recently received a check and aren’t sure what to do next? Rest assured, you have several easy options that can turn that piece of paper into cold, hard cash.
In today’s uncertain economic times, many of us are wondering: where exactly should we put our cash in 2021? Whether you’ve saved up during the pandemic, received a windfall, or just want to make sure your money is working for you, I’ll guide you through the best places to stash your cash this year.
The Cash Dilemma in 2021
Let’s face it – holding physical cash isn’t ideal anymore. Not only is it risky to keep large amounts at home, but cash sitting idle doesn’t grow. With inflation concerns looming in 2021 your money needs to work harder than ever.
I’ve been researching this topic extensively because, like many of you I found myself with extra savings during the pandemic lockdowns and needed smart options for my cash.
Electronic Transfer Options for Your Cash
One of the most convenient ways to move your cash in 2021 is through electronic transfers These digital solutions have become incredibly popular and offer several advantages
Popular Electronic Payment Services
- Venmo – Great for splitting bills and sending money to friends
- PayPal – Widely accepted for online purchases and person-to-person transfers
- Cash App – Simple interface with investing options
- Zelle – Fast transfers directly through many banking apps
- Apple Cash – Seamless transfers for Apple users
These services make transferring money nearly instantaneous, though it’s super important to be careful about who you’re sending money to. Most of these transfers can’t be reversed, so only send to people you trust completely!
Traditional Banking Options for Your Cash in 2021
Despite the growth of digital options, traditional banking still offers solid places to put your cash:
Checking Accounts
Checking accounts provide easy access to your money and typically come with a debit card, online banking, and mobile apps. They’re perfect for everyday expenses and bill payments.
However, most checking accounts offer minimal to no interest in 2021, so they’re not ideal for growing your money.
Savings Accounts
Regular savings accounts are offering dismally low interest rates in 2021 (often around 0.01% at traditional banks), but online high-yield savings accounts present a much better option.
Some online banks are offering rates around 0.50% in 2021 – which isn’t amazing but is definitely better than nothing! Plus, your money remains liquid and FDIC-insured.
Certificates of Deposit (CDs)
If you can commit to not touching some of your cash for a set period, CDs might work for you. In 2021, you’ll find:
- 6-month CDs offering around 0.25%
- 1-year CDs around 0.50%
- 5-year CDs potentially giving 1.00% or slightly more
The downside is your money is locked away, and early withdrawal penalties can eat into your earnings.
Wire Transfers for Large Cash Movements
If you need to move substantial amounts of cash, wire transfers are a secure option. They’re especially useful when:
- Purchasing a home
- Making large investments
- Sending significant sums to family
While wire transfers can be completed quickly (often within hours), they do come with fees. Domestic wire transfers typically cost $25-40, while international transfers can range from $35-50.
Depositing Cash at Physical Locations
If you’re holding physical cash and want to deposit it, you have several options:
Bank or Credit Union Branches
The most straightforward option is visiting your bank’s branch. You’ll need:
- Your ID
- Account information
- The cash you want to deposit
Many banks have ATMs that accept cash deposits as well, making it even more convenient.
Depositing Cash into Someone Else’s Account
Sometimes you might need to put cash into someone else’s account. This can be done by:
- Visiting their bank branch with their account information
- Making an electronic transfer after depositing the cash in your own account
- Using a wire transfer for larger amounts
Be aware that some major banks like Wells Fargo don’t allow cash deposits into accounts that aren’t in your name as a fraud prevention measure.
Alternative Cash Placement Options in 2021
If traditional banking doesn’t appeal to you, consider these alternatives:
Money Market Accounts
Money market accounts typically offer slightly higher interest rates than regular savings accounts while still providing some check-writing abilities. In 2021, you might find rates around 0.60% with higher minimum balance requirements.
Treasury Bills and Notes
For ultra-safe investments, U.S. Treasury securities are worth considering. In 2021, yields are low but they’re still considered among the safest investments.
Corporate Bonds
Corporate bonds offer higher yields than government securities but with slightly more risk. Investment-grade corporate bonds could yield 2-3% in 2021.
Prepaid Cards
If you want to convert cash to a more convenient payment form, prepaid debit cards offer a solution. However, watch out for fees, which can eat into your cash.
Investment Options for Longer-Term Cash
If you don’t need immediate access to your cash, these investment options might provide better returns in 2021:
Stock Market
The stock market has performed surprisingly well despite the pandemic. Index funds like those tracking the S&P 500 offer diversification and have historically provided good long-term returns.
Real Estate
Real estate remains a popular investment in 2021, with home prices rising in many areas. Options include:
- Direct property ownership
- Real Estate Investment Trusts (REITs)
- Real estate crowdfunding platforms
Cryptocurrency
Bitcoin and other cryptocurrencies saw massive gains in early 2021. While potentially lucrative, they’re extremely volatile and not suitable for cash you can’t afford to lose.
My Personal Approach to Cash in 2021
I’ve personally chosen a tiered approach for my cash in 2021:
- Emergency Fund – I keep 3-6 months of expenses in a high-yield savings account for immediate accessibility.
- Short-term Goals – Money I’ll need within 1-2 years stays in CDs or money market accounts.
- Medium-term Cash – Funds I won’t need for 2-5 years go into a conservative mix of bonds and dividend stocks.
- Long-term Investments – The rest goes into more aggressive investments like index funds, with a small portion in higher-risk assets.
Tips for Managing Your Cash in 2021
Here are some practical tips I’ve learned about managing cash this year:
- Don’t keep too much cash at home – It’s not earning anything and could be stolen or damaged.
- Shop around for rates – Online banks frequently offer much better interest rates than traditional banks.
- Consider inflation – With inflation concerns in 2021, keeping too much in cash might mean losing purchasing power.
- Use mobile deposit features – Many banks allow check deposits through their apps, saving you trips to the bank.
- Set up direct deposit – This is the fastest way to get paid and reduces the need to handle physical cash.
Final Thoughts on Cash Management in 2021
The best place to put your cash in 2021 depends on your personal circumstances, financial goals, and risk tolerance. There’s no one-size-fits-all solution.
I recommend dividing your cash into different “buckets” based on when you’ll need it and what you’ll need it for. Keep emergency funds and short-term cash needs in liquid accounts, while putting longer-term cash into investments with higher growth potential.
Remember that financial markets can be unpredictable (as 2020 certainly proved!), so diversification is key. By spreading your cash across different types of accounts and investments, you can better protect yourself against economic uncertainties while positioning your money for growth.
What’s your approach to managing cash in 2021? I’d love to hear your strategies in the comments!
FAQ About Cash Management in 2021
Q: Is it safe to keep large amounts of cash at home in 2021?
A: Generally not recommended due to risks of theft, fire, or other damage. Plus, it doesn’t earn any return.
Q: What’s the safest place to keep cash I might need soon?
A: FDIC-insured bank accounts are safest for cash you need access to within the next year.
Q: How much should I keep in my checking account?
A: Typically enough to cover 1-2 months of expenses plus a small buffer to avoid overdraft fees.
Q: Are online banks safe for storing my cash?
A: Yes, as long as they’re FDIC-insured (which most legitimate online banks are).
Q: Should I invest all my extra cash in the stock market in 2021?
A: No, it’s wise to maintain an emergency fund in cash-equivalent assets before investing in the market.
Remember, the key to successful cash management in 2021 is balancing security, accessibility, and growth potential based on your unique financial situation.
How to fill out a deposit slip
To make a deposit at your bank, you will need to fill out a deposit slip. If you have a checking account, you may have some deposit slips in the back of your checkbook, or you can get one at your bank. Be sure to fill in the date, the name on the account, and the account number. If you don’t have the account number, a teller will be able to look it up with your ID and/or debit card. Then enter the amount of cash (if any) you will be depositing in the “cash” section. Next, list the amount of each check you wish to deposit. If you have more than one check, be sure to list the amounts of each check on their own separate lines. If you run out of room on the front, there are usually additional lines on the back. If you want any cash back from your deposit, enter that amount in the “less cash received” section and sign your name in the signature line. Then add up the total of the cash and checks, subtract any cash received, and enter the total on the “total” line. If you have any questions, your teller or banker will be happy to help you.
How to Cash A Check at Your Bank
If you wish to receive cash for a check, you can take it to your bank and cash it. Simply endorse the back of the check and provide the teller with your account number and ID. The teller will verify there are enough funds in your account to cover the check in the event it ends up bouncing or being fraudulent. That way the bank is not out any money for cashing the check. They will simply take the funds from your account to cover the amount they gave you in cash.