The reality is that millions of people keep most of their money at home. Back in 2009, the AP reported that "As many as 28 million people in the United States are forgoing traditional financial institutions because of mistrust, cultural and language barriers or a belief that by the time all the bills are paid there will be nothing left for an account."
Money invested in "safe" securities does not yield much. American Express (AXP) offers high-yield savings accounts that pay 1%, and six-month CDs with a 0.5% rate. Bankrate.com shows that most financial firms don't offer much better.
Bank account and personal credit information isn't secure enough, if a recent data breach at Citibank (C) is any indication. Hackers gained access to data on as many as 200,000 credit card accounts, and it wasn't the first time Citi accounts were exposed. The FBI investigated the theft of millions of dollars from Citi accounts by hackers in Russia in 2009, The Wall Street Journal reported then. At the time, experts said such virtual bank heists were not unusual at all. And Morgan Stanley (MS) recently lost two CDs containing account information on 34,000 customers.
Meanwhile, the practice of e-commerce operations keeping customer data on remote servers -- in the cloud -- has led to data breaches in systems like the Sony (SNE) PlayStation Network. The exposed data may have included customer credit card information.
A New Risk in the Mix for Bank Customers
And, of course, there is the issue of a U.S. default if Republicans in Congress and President Obama cannot come to an agreement to raise the cap on federal debt before Aug. 2. The Treasury could cancel payments on billions of dollars of U.S. obligations, which means people, institutions and foreign governments that hold American sovereign paper may lose their already-modest payouts. The value of those Treasuries -- viewed as the safest investment in the market -- could plunge. The drop could be particularly severe if the standoff over the debt ceiling goes on for more than a few days past the deadline. Some experts predict global financial mayhem if the U.S. doesn't meet its obligations. Pessimistic analysts believe a default could cause another credit crisis.
The mattress was once viewed as a dangerous place to keep cash. But even though your money doesn't earn a yield when it's in your house, that's beginning to look like a better place to keep it safe.
Gallery: Crazy Places Where People Hide Money