You walk into your bank, ask for your money and you can only get a limited amount. What do you do to pay your bills, buy your groceries and put gas in your car? It’s a problem that’s plaguing Greeks recently, as the country’s debt crisis placed a 60-Euro cap on daily cash withdrawals to keep the banks supplied with enough cash.
Many consumers in this situation turn to debit or credit cards. In Greece right now, these transactions have not been capped, as cash withdrawals have, since transactions using plastic simply travel from Greek bank to Greek bank, and do not leave the economy entirely.
Of course, if you are Greek and don’t have a debit or credit card, and therefore rely on cash to make everyday purchases, you’re stuck with the 60-Euro per day cap on ATM transactions. That is, you can only get that much out of the bank after you’ve waited your turn in a long line with everyone else doing the same thing. For many Greeks, cash is king, so the withdrawal limits are severely impacting their ability to make everyday purchases.
Even with the deal announced Monday between the European Union and Greece, the bank closures and capital limits affecting Greek consumers remain unresolved. It helps to have a credit or debit card, but even places that normally accept such payments are reportedly demanding cash, out of concern that banks won’t be able to reconcile the transactions.
The burning question now in many Americans’ minds: Could ATM limits like this happen in the U.S.?
“It’s a legitimate question because everybody is talking about it, but this is not something that could happen here in the U.S.,” said Rob Strand, a senior economist at the American Bankers Association. He pointed to the financial crisis of 2008 and 2009, in which U.S. banks faced liquidity issues, and it still wasn’t like what’s happening in Greece. “Not since the FDIC was instituted in 1933 has it happened, not once.” The Federal Deposit Insurance Corp. insures each depositor for at least $250,000 per FDIC-insured institution.
The Greece Takeaway
Despite the fact that Americans likely don’t need to worry about facing the low-cash nightmare many Greeks are living through, there is a valuable takeaway here for consumers — the more tools in your wallet, the more prepared you are in case of a disaster.
You might sometime find yourself in a situation where your main form of payment is suddenly unavailable or somehow limited — a credit card machine is down, a merchant won’t accept your $100 bill, etc. That’s an argument for having financial flexibility. With access to a backup payment method, you can make necessary purchases, even if Plan A fails. That’s the idea behind the emergency credit card or keeping a little bit of cash in your wallet, just in case.
Having multiple payment methods can provide a measure of financial freedom. Just make sure you can keep it all organized, so you don’t spend beyond your means or miss any bill payments.
If you don’t already have a credit card and want to get one, you should know where your credit stands before you start shopping around. (You can get a free credit report snapshot from Credit.com.) There are credit cards with simple fee structures which can be a good fit if you’re just looking for a backup payment method. And if you check your credit only to find you don’t have a credit score at all (this is called a “thin file”), you can still get a credit card if you have no credit history.
More on Credit Cards:
- An Expert Guide to Credit Cards with Rewards
- How to Get a Credit Card with Good Credit
- How Secured Cards Can Help Build Credit
Image: iStock
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