Andrew A. was a 24-year-old waiter living in New Jersey. As a result of the pandemic, Andrew lost his job and had to survive on his life savings.
At the time, he had over $80,000 in savings, which was money earmarked for his education.
But, after transferring his money from one bank to another it all “disappeared.”
“I felt like I lost my life savings, and it was very frustrating,” Andrew said.
According to Andrew, “There was a promotion going with Citibank that if you open an account with a certain amount of money, I get $700. So, I was just trying to get that bonus,” he said.
After transferring $50,000 to the new Citibank account both of his bank accounts were frozen the next day.
Andrew had no idea why his bank accounts were frozen. He had bills to pay and no way to pay them. He had to ask his girlfriend to pay his bills and buy him food.
So, he contacted his old bank as well as Citibank and neither institution would give him a reason for freezing his accounts.
Since Andrew couldn’t get any explanation from his two banks, he contacted local media outlets.
One news reporter reached out to the two banks, but the banks said they couldn’t discuss customer accounts.
Suddenly, days later both of Andrew’s bank accounts were thawed and he was able to access his money.
He never did receive answers from his banks about why his accounts were frozen in the first place.
What happened to Andrew is a nightmare scenario. A situation exacerbated by the absence of an emergency fund at his home.
But Andrew isn’t alone in that regard…
In fact, 35% of Americans have less than $100 cash in their home. Another 30% have less than $500 in cash at home.
Meaning, over 65% of Americans don’t have enough cash on hand to survive more than a few days.
Most people would not be able to survive financially if their bank accounts were frozen – to say nothing of a prolonged power outage or a natural disaster.
But for now, let’s just consider a banking collapse where institutions froze worldwide accounts.
Before you think this could never happen, remember that no one ever thought a pandemic would shut down the world.
With the world’s financial systems teetering on the brink of collapse, major banks failing at alarming rates, there is a very real concern that it could happen.
Why would this happen?:
Bank accounts get frozen for all sorts of reasons.
From legal action to fraud investigations banks can, and do, freeze accounts.
But if it were to happen on a major scale, the biggest reason would likely be a cyber-attack.
A cyber-attack on a global financial scale could force banks to stop transfers and block access to money.
The attack would have to be sophisticated and conducted on a large scale.
And the truth is, with today’s economies’ reliance on technology and interconnectedness, it’s not a “what if,” but rather “when” this will occur.
This is why I recommend having at several months’ worth of living expenses in cash in your home, if you are able to.
First impact:
In the event of a global bank account freeze, the immediate impact would be a disruption of daily lives.
Each day people use bank accounts to pay bills, receive their paychecks, and make daily purchases.
In a freeze, this would all come to a halt.
There would also be a run on bank branches (if any are still open)…
People would try to pull cash out of any ATMs…
Folks would also consider trading items for cash at pawn shops and anywhere that they can get cash for goods…
At this point, the cash in circulation would become even more valuable.
Ideally, you wouldn’t need to spend the cash if you have food storage and survival supplies in your home.
Businesses would fail:
Businesses rely on bank accounts to conduct transactions.
If they can’t access accounts this means that transactions would stop unless they were done with cash.
More specifically, small businesses would be affected since they won’t typically have the financial means to withstand the frozen accounts.
These small companies would be forced to lay off employees and reduce services.
Large companies often have a lot of money tied up in bank accounts.
If these are frozen, large companies may survive the short term, but not for long.
Public services from federal, state, and local governments would come to a halt.
If small governments can’t collect taxes and revenue, then services would be impacted.
If cities and towns can’t pay their police or fire departments, it would be challenging to keep them operating.
During a bank account freeze you will be less able to depend on local services.
This is another reason you need to be prepared to protect your home and family without relying on local governments.
Now, you might be thinking that this is unlikely to happen.
And I tend to stay positive and hopeful that the systems in place may help prevent a worldwide banking collapse.
But with the rise in digital currency, global pandemics, cyber-attacks by hackers, terrorists, and rogue nation-states, and potential wars among superpowers…
The frightening truth is that a worldwide freeze on bank accounts is very possible.
