Withdrawing Huge Cash is a Risky Move During These Quarantined Times

Posted by under In Focus, Personal Finance . Published: May 1, 2020

I’m currently working with BDO for their #BANKyanihan campaign. I was interviewed for an article that was recently published, which I’m reposting below.

With the government’s decision to extend the enhanced community quarantine (ECQ) in Luzon until May 15, the National Economic Development Authority warns of a continuing economic slowdown which is likely to cause worries for consumers and entrepreneurs even more.

As many businesses remain closed and many employees remain jobless, there is a lot of pressure to hoard cash at home as a way to have a ready means to spend should emergencies happen.

But withdrawing huge cash from bank accounts is not really a good idea, according to registered financial planner, Fitz Villafuerte.

“Fear is always the initial reaction when such events happen. And fear always translates to selling in the stock market because during these times, having cash is important. The massive selling results in the stock market value going down.”

“And in this case of a pandemic when the whole world is affected, everything and not just the stock market is affected. All asset classes can go down,” he explained.

This panic reaction was exactly what happened on March 20th, when the Philippine Stock Market opened after a 2-day shutdown on trading. On that day the stock market lost some P1.6 trillion easily described by some traders as a “bloodbath”.

It happened because people were afraid of the possible effects of the Covid-19 pandemic and started selling their stocks to generate cash on hand.

Resist temptation

According to Villafuerte, people should resist the urge to hoard cash. This is because it may create even worse financial risks.

“Keeping a huge amount of cash at home is riskier than we think. Yes, we feel more secure knowing the cash is within easy reach–but that’s a false sense of security. For example, the cash could easily be misplaced or worse, it could get stolen,” he said.

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Furthermore, the attention and effort that people give to securing cash at home only adds to their anxiety and stress. “At this time, we really should be focusing on helping ourselves and our families stay safe and healthy. We don’t need to add keeping our cash safe to our worries,” Villafuerte said.

Having a lot of cash on hand might also disrupt household budgets and may cause them to spend more than what they need.

“With so much cash in hand, the temptation to spend is higher, especially if you don’t have financial discipline. One friend of mine, for instance, regretted bringing a lot of cash during his last visit to the grocery store,” noted Villafuerte.

He added, “That’s because instead of buying only the necessities, he ended up buying several other items that, in retrospect, were unimportant and not of any use during the community quarantine.” As a result, said person ended up with less, not more, cash on hand.

Banks remain open

Villafuerte pointed out that banks continue to remain open during the ECQ and this means there’s ready access to cash, anyway. ATMs, mobile banking, and online banking are all in operation for various types of banking transactions.

He said now is the time to maximize the advantages of online transactions. First of all, online transactions remove the need to go out for a trip to the bank. This reduces potential exposure to the virus and allows the quarantine to be more effective in stopping the spread of the disease.

“If your money is in the bank and you have online banking, you can just stay at home and do those tasks and many more online. For example, I paid my bills and sent money to my parents through online banking. And then I’ve used my debit card on apps to buy groceries, have food delivered to me, and even send financial donations,” he said.

Ultimately, he said the key is to stay calm and not give in to fear during this extraordinary time.

“Anticipate your expenses and withdraw only the money you’ll need for the next 2 weeks. And when your cash starts to run low, then you can just do a quick visit to the nearest ATM. There’s no need to stash a lot of cash at home. It’s normal to feel anxious about what’s happening, but it’s also important to stay grounded and not let fear control our decisions,” he emphasized.

For those who have limited online access or need to make important transactions within bank premises, the country’s leading bank BDO has kept many branches open in selected areas. Its bankers, managers, tellers, and other staff continue to work at the frontlines to help keep the country’s economy running through the crisis brought by the global pandemic.

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2 Responses to “Withdrawing Huge Cash is a Risky Move During These Quarantined Times”


  1. Jack says:

    During a time of normal conditions, I am the type of guy who wants to see every spare Peso at work earning for me. I have lived though a number of natural disasters deep in the woods at my farm in the north east US. Cash would do you ZERO good, NOTHING to spend it on. Life went on at the farm if you had the skills and know how to survive. I had a lot of city folk on the main road that were very appreciative of my root cellar, abundant firewood pile and the fact that I had plenty of extra K1 and kerosene lanterns. Now, on this side of the pond, living in a subdivision and semi-retired, I have new challenges when a crisis like COVID-19 hits. My beautiful bride and I are truly blessed in that she still has writing assignments offered to her from two companies she writes for. She enjoys steady income can even make wire transfers online to pay for things. I can depend, unless the US goes bust, there will be an SS check deposited into one of my brokerage accounts every month and WOW, I am earning INSANE money selling option contracts at this time because of the super high market volatility. On the downside, all three of our local Philippine based business ventures are on hold til this crisis is over.

    Now, I must honestly say it was a huge mistake to NOT have a LOT more cash on hand in the home than I did when this crisis began. Early on, my US based VISA card failed to work at places we normally shop. I understand the logic of government and or banks attempting to have at least a little cash for everyone in the ATMs which, by the way, our bank admitted that they were not refilling as much as before the crisis began. Call it cash rationing if you like.

    Here is one example of an unintended consequence: I wanted to help my two brother-in-laws with some extra cash early on, going into this crisis. It was a good thing my wife did make a withdrawal before foreign credit cards were no longer functioning. It turns out that one brother-in-law who is employed by the Philippine government has not and will not receive a paycheck until he returns to work. We were fortunate to be informed by the bank manager where we have our business account, that my card would again function on a certain day and that my wife could again get some cash. The money she was able to send her brother three times was the ONLY money the family have had during this emergency!!

    Why can our relatives not use their emergency fund? GONE. Mid 2019 their little boy, our nephew, was hit by a tricycle while crossing the street to get on a tour bus for a school trip. One leg was totally crushed and no attempt to set the leg worked. Something had to be done. The choice was surgery to install a set of plates or amputate the the leg. The family funds were depleted and again we had to step in. So there you go, a hard working government employee with ZERO income and ZERO emergency fund. These are reasons why I plan to hoard more cash in the future, someone may desperately need help and I do not want to be prevented from doing what I am financially able to do!!!

  2. Louise Anne Ubaldo says:

    I agree with most of your points. But in my area (province), which is currently on lockdown, the ATMs are often “unavailable” or out of order. The nearest bank is in the next town, which we cannot reach because both our towns are on total lockdown. Hence, i have had to withdraw a month’s worth of cash to make sure we have enough cash for expenses (we don’t have many online services in our town either) until the end of the lockdown.

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