Five Things to Know About Safe Deposit Boxes, Home Safes and Your Valuables
Over time, your valuables change, and so do your options to protect them. Here are a few choices, including safe deposit boxes and home safes, along with suggestions on how to assess each option for your specific needs.
Think about what should or should not be kept in a bank's safe deposit box. Good candidates for a safe deposit box include originals of key documents, such as birth certificates, property deeds, car titles and U.S. Savings Bonds that haven't been converted into electronic securities. Other possibilities for the box include family keepsakes, valuable collections, pictures or videos of your home's contents for insurance purposes, and irreplaceable photos.
Be mindful not to use your bank safe deposit box to store anything you might need to access quickly or when the bank is not open. That could include passports and originals of your "powers of attorney" that authorize others to transact business or make decisions about medical care on your behalf. For guidance on where to store your original will, check with an attorney about what is required or recommended based on state law.
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You're better off stashing your cash in a bank deposit account, like a savings account or certificate of deposit, than in a home safe or a safe deposit box. Among the reasons: "Cash that's not in a deposit account isn't protected by FDIC insurance," noted Luke W. Reynolds, Chief of the FDIC's Community Outreach Section. That's because, by law, the FDIC only insures deposits in deposit accounts at insured institutions and only in the rare instances when a bank fails. A safe deposit box is not a deposit account. It is storage space provided by the bank, so the contents, including cash, checks or other valuables, are not insured by FDIC deposit insurance if damaged or stolen. Also, financial institutions generally do not insure the contents of safe deposit boxes. If you want protection for the valuables in your safe deposit box or home safe, talk to your homeowner's or renter's insurance agent about adding coverage under these policies.
"And unlike money in a savings account, money in a home safe or safe deposit box cannot earn interest, so the purchasing power of your cash will decrease," said Reynolds.
Also read the terms of the safe deposit box rental agreement, as the bank may limit what you can keep in the box. These limitations could include cash.
A home safe isn't a true replacement for a bank's safe deposit box. A home safe could be used to store replaceable items you may need immediate access to, such as a passport. But home safes are not as secure as safe deposit boxes. "A burglar could more easily break into your home and open the safe than get inside your safe deposit box at your bank," said Reynolds.
No safe deposit box or home safe is completely protected from theft, fire, flood or other loss or damage. Consider taking precautions, such as protecting against water damage by placing items in water-safe, zippered plastic bags or other plastic containers that can be resealed. And, don't keep identifying information on or near your safe deposit box key, such as the box number and the bank's name, in case of loss or theft. Remember that, by law, FDIC insurance covers only deposit accounts. Also, don't expect the bank to reimburse you for theft of or damage to the contents of your safe deposit box. Again, you can ask your insurance agent about providing some coverage in your homeowner's or renter's policy.
Be mindful of whom you allow to access your safe deposit box. You can jointly rent a safe deposit box with one or more people whom you would like to give unrestricted access. Keep in mind, though, that your bank would likely not be responsible for anything that people you authorize to enter the box remove without your permission.
Who has access to your safe deposit box if you die? "The rules under which safe deposit boxes may be accessed upon the death of a safe deposit box owner depends on state law," said FDIC Counsel Richard Schwartz. "These rules restrict entry into the safe deposit box to certain individuals and permit entry only under controlled situations."
This is an updated version of an article originally published in the Fall 2009 FDIC Consumer News.
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FAQs
FDIC deposit insurance enables consumers to confidently place their money at FDIC-insured institutions across the country. The FDIC is funded by FDIC-insured institutions, not taxpayers, and FDIC deposit insurance is backed by the full faith and credit of the United States Government.
Has the FDIC ever paid out? ›
Since the FDIC began operations in 1934, no depositor has ever lost a penny of FDIC-insured deposits. FDIC insurance covers depositor accounts at each insured bank, dollar-for-dollar, including principal and any accrued interest through the date of the insured bank's closing, up to the insurance limit.
What problem was the FDIC trying to solve? ›
The FDIC played a primary role in stabilizing the banking system during various periods of turmoil in U.S. history, including during the Great Depression (1930s) when there was widespread bank failures, the Savings and Loan Crisis (1980s–early 1990s) when there was a collapse of many of these institutions due to risky ...
Was the FDIC new deal successful? ›
The Banking Act of 1933, which created the FDIC, was signed by President Roosevelt on June 16, 1933. By almost any measure, the FDIC has been successful in maintaining public confidence in the banking system.
How does the FDIC protect consumers money? ›
The FDIC protects the money depositors place in insured banks in the unlikely event of an insured-bank failure. Each depositor is insured to at least $250,000 per insured bank. FDIC deposit insurance covers all types of deposits held at an insured bank.
Who did not benefit from FDIC? ›
Investment products that are not deposits, such as mutual funds, annuities, life insurance policies and stocks and bonds, are not covered by FDIC deposit insurance.
Where do millionaires keep their money if banks only insure 250k? ›
Millionaires can insure their money by depositing funds in FDIC-insured accounts, NCUA-insured accounts, through IntraFi Network Deposits, or through cash management accounts. They may also allocate some of their cash to low-risk investments, such as Treasury securities or government bonds.
Which banks are collapsing in 2024? ›
But what is striking about the failure of Republic First is that there are many unhappy banks out there that are unhappy in substantially the same way — and may be facing the same inevitable demise." Republic First Bank failed on April 26, 2024. Citizens Bank of Sac City, Iowa, failed on November 3, 2023.
Has anyone ever lost money in an FDIC insured bank? ›
Since the FDIC began insuring deposits in 1934, no depositor has lost a penny of FDIC-insured funds as a result of an insured bank's failure. The FDIC only pays deposit insurance after an insured bank fails. Coverage is only available for the deposits that are held in the insured bank at the time of its failure.
What is the truth about the FDIC? ›
FDIC insurance is the means by which the Federal Deposit Insurance Corporation protects your accounts if your bank fails. The standard insurance amount is $250,000 per depositor, per account ownership type, per financial institution. Consumers don't have to do anything to take advantage of this coverage.
The Board of Directors of the FDIC manages operations to fulfill the agency's mission. Each member of the five-person Board is appointed by the President and confirmed by the Senate.
Who funds the FDIC? ›
The FDIC receives no appropriation from Congress, although it is backed by the full faith and credit of the U.S. government. Instead, the agency is funded by insurance premiums paid by banks and from interest earned on the FDIC's Deposit Insurance Fund, which is invested in U.S. government obligations.
Who opposed the FDIC? ›
Opposition to such a plan had been voiced earlier by President Roosevelt, the Secretary of the Treasury and the Chairman of the Senate Banking Committee. They believed a system of deposit insurance would be unduly expensive and would unfairly subsidize poorly managed banks.
How much of your money is safe in an FDIC insured bank? ›
The standard insurance amount is $250,000 per depositor, per insured bank, for each account ownership category.
Does the FDIC still exist today? ›
The Federal Deposit Insurance Corporation (FDIC) is an independent agency created by the Congress to maintain stability and public confidence in the nation's financial system by: insuring deposits; examining and supervising financial institutions for safety and soundness and consumer protection; making large and ...
How does the FDIC affect citizens? ›
The FDIC helps maintain stability and public confidence in the U.S. financial system. One way we do this is by insuring deposits to at least $250,000 per depositor, per ownership category at each FDIC-insured bank.
What is the FDIC definition of consumer harm? ›
The FDIC's consumer compliance examination process is risk- focused based on the potential for consumer harm. “Consumer Harm” is an actual or potential injury or loss to a consumer, whether such injury or loss is economically quantifiable (e.g., overcharge) or non-quantifiable (e.g., discouragement).
How was the FDIC effective? ›
Federal deposit insurance became effective on January 1, 1934, providing depositors with $2,500 in coverage, and by any measure it was an immediate success in restoring public confidence and stability to the banking system. Only nine banks failed in 1934, compared to more than 9,000 in the preceding four years.
What does the FDIC do for the economy? ›
To accomplish this mission, the FDIC insures deposits; examines and supervises financial institutions for safety, soundness, and consumer protection; makes large and complex financial institutions resolvable; and manages receiverships.
