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Wednesday, October 24, 2012

Keeping Cash on Hand, Just in Case

Earlier this year, I joked in a post that interest rates were so low on savings accounts that it might make sense to store cash under your mattress - or at least somewhere safe in your home.

But the recent “denial of service” attacks on big banks in the United States that temporarily blocked some customers from using their online accounts got us at Bucks wondering again: Is having some cash on hand, in case of an extended outage, a good idea? And how much is reasonable?

The attacks, which struck a half-dozen large banks, including Bank of America and Chase, last month and, more recently, additional banks like Capital One, affected the banks' online accounts only. The banks' mobile banking applications and telephone banking systems, as well as their automatic-teller machines, weren't affected. So customers could still get cash from the A.T.M.'s.

Mark Pipitone, a spokesman for Bank of America, had this to say in an e-mail: â €œIt's important to point out that most of our customers experienced no difficulties on 9/18. Our other channels, including mobile banking, banking centers and A.T.M.'s, were available and unaffected.”

Chester Wisniewski, senior security adviser at the electronic security firm Sophos, said the A.T.M. networks that are run by the major banks are less vulnerable to cyberattackers because they are largely private systems that aren't exposed to the Internet. “Is it likely that they could impact those A.T.M. networks? Largely, no,” he said.

Some private-label A.T.M.'s, like those in gas stations or convenient stores, might, in theory, be subject to similar, if less high-tech, “denial of service” attacks because they sometimes use telephone lines to reach their networks. So an organized attack could conceivably work by tying up phone lines, just as Internet attacks tie up Web sites by flooding them with traffic and slowing them so much that regular customers can't use them.

So what about hiding some cash at home? I personally don't do it, even though there are now clever gadgets, like fake electrical outlets, that help make hiding places less obvious. I can barely remember to keep cash in my wallet for everyday purchases; never mind hoarding piles of it for some unlikely catastrophe.

But Mr. Wisniewski said that especially since the attacks of 9/11, he is a proponent of having cash on hand, and he often travels with as much as $1,000 in his wallet. He doesn't like to say where he keeps it at his house, for obvious reasons, but he says he wants to have enough available to cover costs like food and transportation for a week or two, if necessary. (He's also a diabetic, so he likes to have two months of his medication on hand, too.) How much you feel safe keeping around is up to you, he said. “It all depends on your personal level of paranoia.”

One caveat about keeping it at home, he said, is that “the better you are at hiding it, the more likely you are to forget where it is.”

The major banks we contacted dodged the cash-on-hand question. They generally would prefer, after all, that you keep your cash with them.

Wells Fargo and Chase referred me to tips from the Financial Services Roundtable, which largely focused on advice like using antivirus software on your computer and strong online passwords.

Citibank didn't immediately respond to an e-mail seeking comment.

Have the recent denial-of-service attacks caused you to change your banking habits? How so?