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CU System
Consumers stashing cash in checking accounts: Moebs
LOS ANGELES (7/22/14)--U.S. consumers are keeping their cash in checking accounts at a higher rate than at any time in the last quarter-century, according to report from the bank consulting firm Moebs Services Inc. ( Los Angeles Times July 17).

The Moebs report found that the average checking account balance across the country was $4,436 at the end of 2013, more than double the average seen over the last 25 years.

When the economy was booming prior to the recession in 2008, checking accounts had dropped to an average of about $788, according to Moebs.

"When times get difficult, the consumer sits things out and checking balances get larger, normally upward (of) $3,000 or a bit beyond," the study said ( Los Angeles Times ).

For credit unions, share draft accounts also have seen increases of late. In May, share draft accounts made up 14.2% of a credit union's savings portfolio, a 0.7% year-over-year increase and nearly a 4% jump since 2008, according to the Credit Union National Association's June credit union estimates report.

This trend may reflect that consumers and credit union members are still wary of the economy and of their own finances.

"If the economy is doing well as measured by low unemployment and moderate-to-low inflation and prices, then the average balance in the consumer's checking account falls to about $1,400," the report said ( The Washington Post July 18). "If the economy really heats up, then, in 2007 for example, the balance can fall below $1,000 since household revenue is doing well and need for liquidity is just a paycheck or two away."

While consumers may be holding onto cash to stave off overdraft fees or to meet minimum balance requirements, Moebs believes consumers are actually stockpiling cash to build up an emergency fund in case of future difficult financial times.

"They're saying, 'Let's be cautious; let's not use all of the money,'" Greg McBride, Bankrate.com chief financial analyst, told The Washington Post .


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