While a quarter of Americans say rising rates have influenced where they store their cash, other economic factors like regional bank failures and congressional debt have had little effect    

Greenwood Village, COLO – August 15, 2023 — “Cash is king,” according to nearly 1 in 5 of Americans (17%) who prefer the minimal risk and convenience of cash — and rising interest rates may prove some savers right, according to new research from Empower, a leader in planning, investing and advice.  Soaring rates and yields for high interest accounts, including Empower Personal Cash™ now offering 4.70% APY, are driving a quarter (22%) of U.S. adults to stash more.¹

Only a quarter of savers say inflation (26%) influenced their approach to holding their money in a cash account. Additionally, this year’s regional bank failures had little impact on cash savings for the vast majority (73%), though 16% say it prompted them to keep more on hand.

Almost a third (28%) of respondents say they feel safer when they keep money in cash. The median cash allocation for users of the Empower Personal Dashboard^TM is $67,390, making up more than 26% of users’ overall portfolio. That’s an increase of 15% in cash holdings over the same period last year ($58,394 in 2022), perhaps driven in part by a volatile market and threat of recession. A sign that times may be changing, Gen Z survey respondents were six times more likely than Boomers to have all their money invested in the market, though striking the right investment balance remains key.

“If you have any significant amount of money sitting idle in a low-interest account, it could actually be losing money,” says Paul Deer, CFP^®, Vice President at Empower. “Cash accounts have their place in a diversified financial strategy, but if your cash is in an account offering a yield lower than the current rate of inflation, your money could lose buying power over time.”

Yielding a higher return

When it comes to choosing a savings account, more than 1 in 4 Americans (26%) say they’re seeking the best yield to get the most bang for their buck, yet half (49%) admit to using the same bank that handles their checking account or base their choice on the convenience of physical locations (32%). Deer says, “Consumers may be under-utilizing the power of compound interest and passive income offered by online accounts, which often can pass overhead cost savings back to customers in the form of higher annual yields.”

Empower Personal Cash™ is a high-yield cash account with no account minimums, no fees, and flexible deposits and transfers. “This type of account does more than just stash cash; it helps users earn while having the flexibility to access their money,” says Deer.

Other key findings:

• Counting cash: More than half of respondents (55%) defined cash as more than physical money, including traditional savings accounts, high yield cash accounts, and money market accounts.
• Cashing in: One item Americans can’t leave home without? Cold hard cash. Americans are more likely to carry physical cash (69%) than Chapstick (31%), mints (20%) and a checkbook (17%). The two biggest reasons people keep money on hand include emergencies (55%) and tipping (26%).
• Dollars and sense: Yet, when it comes to checking out, one third of people say they rarely pay with dollar bills (21% less than monthly, 13%, never) and 40% say they never use a checkbook. Instead, the majority are frequently (weekly or more) using debit or credit cards (77%). Several frequently pay with digital payment platforms like Zelle or Venmo (34%) and apps with preloaded funds (21%) like Starbucks. Over one third (39%) say they pay with rewards program points at least once a month.
• Saving for spending: Among Americans saving up for big purchases, the most popular method of saving is often stashing cash in traditional savings accounts: dream vacation (31%), a new car (31%) a down payment on a home (27%) and a wedding (26%).

The full report can be found on The Currency™.

Visit Empower.com to learn more about its free financial tools and Empower Personal Cash.

*ABOUT THE STUDY

Empower contracted Morning Consult to conduct an online survey of 2,200 adults July 20-23, 2023 and the data was weighted to approximate a target sample of adults based on gender, age, race, educational attainment, and region. Results from the full survey have a margin of error of +/-2 percentage points. For this survey, “cash” is defined as any physical currency, checking, or savings accounts. Not included are investment accounts and non-liquid assets.

ABOUT EMPOWER 

Empower, a leader in financial planning, investing, and advice, is dedicated to creating financial freedom through people and technology. It administers approximately $1.3 trillion in assets for more than 17 million retirement plan participants and is the nation’s second-largest retirement plan recordkeeper by total participants.² Connect with us on Empower.com. 

Media Contacts:

Rebecca Rickert: rebecca.rickert@empower.com

Katelyn Kwiatkowski: katelyn.kwiatkowski@empower.com